SM Investments Corp., the holding company of retail magnate Henry Sy, yesterday said it will sell its entire stake in food and beverage giant San Miguel Corp. for P27.1 billion ($620 million) to concentrate on businesses ranging from real estate to finance.
SM Investments said in a statement that its board approved the sale of 339.35 million shares, representing an 11 percent interest in San Miguel, to San Miguel Retirement Fund at P80 per share. The buyer is a pension fund owned by employees of San Miguel.
“This is a good strategic move for SM Investments,” said PJ Garcia, who helps manage the equivalent of $1.95 billion at ING Investment Management Philippines. “This sale enhances shareholders’ value and the proceeds can be deployed to the core businesses of SM that will give it higher returns.’’
The selling price of P80 per share was higher than San Miguel’s closing price in the stock market yesterday.
San Miguel A shares, reserved for local investors, close unchanged at P59.50, while the B shares, open to foreigners, edged lower at P62 from Tuesday’s close of P62.50.
It was an “opportunity to cash in on one of our investments,” SM Investments chief finance officer Jose Sio said in a statement. The sale will allow SM “to focus on retail merchandising, mall operations, banking and property development.”
“We still believe San Miguel is a company worth investing given its strong brand franchise in beer and its dominant position in the food and beverage business,” Sio added.
SM Investments, which has gained 22 percent this year, closed unchanged at P380.
The transaction will raise the retirement fund’s stake in San Miguel to 26.76 percent from 15.76 after earlier acquired the shares of Social Security System and Government Service Insurance System.
SM Investments said it would use proceeds from the sale of San Miguel shares for general corporate purposes, capital expenditures and other investments.
SM Investments is aggressively pursuing property projects in areas such as residential and commercial development, mainly at the Mall of Asia Complex, tourism in Hamilo Coast and hotels in key cities across the country.
“All these projects will require a considerable amount of capital expenditure for the company moving forward,” SM Investments said.
San Miguel Retirement Fund has been increasing its stake in the company by purchasing the shares of existing shareholders.
In June, GSIS and SSS sold their stakes in San Miguel for P14 billion and P13.2 billion, respectively. With Bloomberg.