SEC Okays San Miguel Brewery IPO

The Securities and Exchange Commission has approved the initial public offering (IPO) of San Miguel Brewery Inc., the flagship domestic beer unit of conglomerate San Miguel Corp., to raise between P6.16 billion and P23.84 billion in fresh equity.

In its amended registration statement, San Miguel Brewery said it plans to sell between 770.52 million and 1.548 billion shares through a primary and secondary offering at a price ranging from P8 to P15.40 per share.

The new price range is lower than the original indicative range of P9.50 to P16.30 each share.

Of the total offer shares, up to 154.88 million new common shares will be sold through the IPO while a maximum of 1.393 billion shares will be sold by existing shareholders.

Proceeds from the offering will be used to cover capital expenditures.

San Miguel Brewery has tapped Citigroup Global Markets Ltd. as lead underwriter for the international issue while ATR Kim-Eng Capital Partners Inc. and BDO Capital & Investment Corp. will serve as joint lead underwriters for the domestic offer.

The listing of San Miguel Brewery is part of a broader plan to list all of the San Miguel group’s operating units on the exchange.

The final offer price for the shares will be known on April 9 while the international roadshow starts on March 28 until April 6. The domestic offering, on the other hand, will run from April 10 to 16.

Listing has been tentatively scheduled on April 22.

San Miguel Brewery has budgeted P700 million for its capital expenditures this year to further strengthen brand portfolio, expand its coverage, and improve its facilities and equipment.

San Miguel Brewery, the country’s largest producer of beer with a market share of about 95 percent, disclosed that its net income went up by 9.34 percent last year to P8.015 billion, from P7.33 billion in 2006, on higher sales.

Net sales rose 8.8 percent to P44.14 billion from P40.56 billion on increased volume of beer sales, largely due to the company’s decision not to increase prices, higher foreign exchange rates and stable prices of raw materials.

The company has five breweries strategically located across the Philippines, with a total production capacity of 15.1 million hectoliters. Among its beer brands include all of the top four brands in the country, namely San Miguel Pale Pilsen, Red Horse, San Mig Light and Gold Eagle.

It also offers popular brands such as Super Dry, Cerveza Negra, San Mig Strong Ice, Gold Eagle and Cali, the country’s only malt-based non-alcoholic drink.

San Miguel Brewery expects beer volumes to continue to grow, driven in part by the strong economic growth forecast of 6.3 percent to seven percent for 2008, coupled with low inflation.

Although it already has a very strong position in the local beer market, San Miguel Brewery intends to increase the visibility and availability of its products in specific areas in North and South Luzon as well as in Visayas and Mindanao.

San Miguel Brewery also intends to implement new programs and initiatives catering to the younger segment of the market to protect its core customers and strengthen the appeal and preference for the brand among new drinkers.