SMC completes purchase of 49% stake in Ongpin-led firm

MANILA, Philippines - Diversifying food and beverage conglomerate San Miguel Corp. has completed the purchase of a 49-percent stake in key shareholder Top Frontier Holdings Inc., a group led by former Trade Minister Roberto V. Ongpin.

Ferdinand Constantino, corporate information officer of San Miguel, told the Philippine Stock Exchange that the transaction was completed Thursday, but did not say how much the company paid for the Top Frontier shares.

Top Frontier, whose other shareholders are businessmen Iñigo Zobel and Jose Campos, bought 28 percent of San Miguel for P64.3 billion or P75 each share in November when it also announced plans to take over the conglomerate.

Top Frontier is poised to become San Miguel’s biggest shareholder once it acquires another 20 percent from Q-Tech Alliance Holdings Inc., which is 30 percent owned by Ongpin. The deal, when completed, will bring Top Frontier’s total shareholdings in San Miguel to 48 percent, exceeding the threshold that would trigger a mandatory tender offer obligation.

Q-Tech Alliance purchased the 20 percent stake of Japan’s Kirin Holdings Co. Ltd. in San Miguel for P39.61 billion last May.

Once the acquisition of the Q-Tech shares is completed, Top Frontier will be required by law to make a tender offer for the remaining shares of San Miguel, which could further boost its ownership of the company.

Under the tender offer rule, any entity or person who acquires at least 35 percent of a listed company within a one-year period must offer to buy out other shareholders at the same price agreed upon with the block seller.

Top Frontier will buy out other San Miguel shareholders at P75 each share, a four percent premium to Friday’s closing price. The tender offer is slated in March.

San Miguel president and chief operating officer Ramon S. Ang said the conglomerate’s investment in Top Frontier “will ensure continuity of the ongoing business operations and strategic plan of San Miguel and the stability of its organization.”

While Ongpin is seen as an ally, San Miguel’s acquisition of Top Frontier ensures that the food and beverage conglomerate’s current management cannot be easily changed, analysts said.

Meanwhile, Top Frontier’s acquisition entitles it to five board seats in San Miguel, it was the group’s consensus to maintain the current composition of the diversifying conglomerate to ensure the orderly implementation of San Miguel’s strategy to diversify into infrastructure, telecommunications, mining, energy and related industries.

Incorporated in March 2008, Top Frontier is owned 40 percent each by Zobel and Campos.

The remaining 20 percent is held by Ongpin together with Master Year Ltd., a foreign-owned company.

Ongpin, Zobel and Campos are also behind Global 5000 Investments Inc., a key ally of San Miguel in power utility giant Manila Electric Co. (Meralco).