Pure Foods gets SEC nod to hike capital to P2.46 billion

MANILA, Philippines - San Miguel Pure Foods Co. Inc., the food manufacturing unit of diversifying conglomerate San Miguel Corp., has secured the go-signal from the Securities and Exchange Commission to raise its capitalization from P1.46 billion to P2.46 billion.

The capital increase will cover the issuance of shares to parent company, San Miguel, in exchange for the latter’s holdings in three other food subsidiaries. The move is in line with the group’s strategy to consolidate all its food businesses under Purefoods as San Miguel diversifies into heavy industry to spur growth after years of reliance on a maturing home market for food and drinks.

After the share swap, San Miguel’s ownership in Purefoods would rise to 99.92 percent from 99.83 percent.

Purefoods, in turn, will own 100 percent of San Miguel Foods Inc. a feeds business, and dairy firm Magnolia Inc. and 95.95 percent of fresh meats seller Monterey Foods Corp.

To fund its diversification, San Miguel has put its 49 percent stake in Purefoods on the auction block, attracting several local and foreign entities including the Campos family, which owns food conglomerate NutriAsia Group and leading pharmaceutical firm United Laboratories Inc., and Universal Robina Corp. of the Gokongwei family.

Purefoods, which has an estimated enterprise value of $1.8 billion, holds 40 percent of the local poultry market and 63 percent share of the hotdogs segment. It is currently in a joint venture with American meat company Hormel for its canned and processed meats business.

For this year, Purefoods is looking at a 10-percent to 15 percent growth in its net earnings, banking on improved efficiencies and effective cost management.  From January to March this year, Purefoods reported a six-fold increase in net profit to P872 million on revenues of P18.2 billion. Income from operations grew more than two-fold to P1.4 billion.

Purefoods is eyeing P5 billion from the issuance of shares through a private placement to boost its public float and settle payables to its parent firm.