San Miguel Agrees to Takeover by Ongpin-Led Directors, Driving Up Shares

(Bloomberg) — San Miguel Corp. agreed to a takeover offer from a company controlled by its directors that values the largest Philippine food and beverage maker at 171.7 billion pesos (US$3.74 billion).

The company’s shares surged.

Top Frontier Holdings Inc., part-owned by former trade minister Roberto Ongpin and Inigo Zobel, a member of one of the country’s richest families, plans to offer 75 pesos for each share in the foodmaker, San Miguel said yesterday.

That’s 12 percent more than the closing price in Manila yesterday.

The offer will be triggered in March when Top Frontier, which owns 26 percent of San Miguel, completes the purchase of a stake held by Q-Tech Alliance Holdings Inc., San Miguel said.

The deal’s completion will give Ongpin and Zobel’s Top Frontier control over a company with more than $3.3 billion in cash as of June and which is expanding into faster-growing industries such as energy and telecommunications.

“San Miguel is moving toward consolidation of control of the company with the objective of achieving greater management stability,” said Allan Yu, who helps manage $4.2 billion at Manila-based Metropolitan Bank & Trust Co.

“This can enhance the value of the shares.” San Miguel’s A shares rose 6.7 percent to 71.5 pesos at 9:55 a.m., the biggest intraday gain since Nov. 27. That boosted their advance in the past year to 71 percent, compared with a 52 percent increase in the local benchmark index.

Its B shares, which foreigners can buy, climbed as much as 7.5 percent, the most in more than five months.

Top Frontier Stake

As part of the plan, San Miguel will also buy a 49 percent stake in Top Frontier, the beer maker said in its statement sent by e-mail.

“San Miguel seems to be funding its own takeover,” said Jonathan Ravelas, market strategist at Banco de Oro Unibank Inc. in Manila.

Top Frontier bought 28 percent of Manila-based San Miguel from the company’s retirement fund.

Q-Tech earlier last year agreed to purchase Kirin Holdings Co.’s 20 percent stake. Ongpin and closely held Master Year Ltd. own 20 percent of Top Frontier while Zobel and businessman Joselito Campos each hold 40 percent, according to the company in November.

Q-Tech’s investors include Mirzan Mahathir, chairman of Crescent Capital Bhd. and a son of former Malaysian Prime Minister Mahathir Mohamad.

Top Frontier “will execute an agreement” to buy 327 million common shares of San Miguel held by Q-Tech.

It will also have the option to buy a further 302 million shares from Q-Tech and rights over various mining assets, San Miguel said in the statement. Q-Tech currently owns 19 percent of San Miguel.

San Miguel said its board approved the investment based on Top Frontier agreeing to sell its San Miguel shares in a “orderly” manner to broaden the company’s shareholder base.

“An investment in Top Frontier is in the long-term interest of the shareholders of San Miguel,” San Miguel President Ramon Ang said.

“This will ensure continuity of the ongoing business operations and strategic plan of San Miguel.”