Top Frontier takes additional 20% stake in SMC

MANILA, Philippines - Top Frontier Investments Holdings Inc., a privately-held firm controlled by the group of former Trade Minister Roberto V. Ongpin, completed yesterday the acquisition of the 20-percent stake held by Q-Tech Alliance Holdings Inc. in food-to-power conglomerate San Miguel Corp. (SMC).

The deal involved the purchase of Q-Tech’s 301.6 million shares through the facilities of the Philippine Stock Exchange and gives Top Frontier control over a company that is aggressively expanding into faster-growing industries such as energy and telecommunications, backed with more than P125 billion in cash and cash equivalents as of end-December last year.

Ongpin, an ally of SMC president Ramon Ang, is also part owner of Q-Tech which in February 2010 bought out Japanese beverage giant Kirin Holdings’ 20 percent in the diversfying conglomerate.

The transaction forms part of a share purchase agreement signed in January 2009 which gave Top Frontier the option to buy the remaining stake of Q-Tech in SMC at P70 per share until March this year. It brings Top Frontier’s total shareholdings in SMC to 47.5 percent of the total capital stock.

The share price of SMC in January 2010 was trading at a range of P68-P72 per share. The stock has now grown more than two-fold, closing 1.4 percent higher yesterday at P162.50 apiece.

The first tranche, involving 327 million shares, was crossed in April 2010 simultaneous with the tender offer made by Top Frontier to all SMC shareholders.

“The investment of Top Frontier in the company is for the long-term interest of our shareholders and reflects our confidence in the overall business diversification strategy of SMC and its current management,” said Eric Recto, president of Top Frontier.

SMC itself owns 49 percent of Top Frontier. The investment was made to ensure continuity of the ongoing business operations and strategic plan of SMC and the stability of the conglomerate’s organization.

Ongpin and closely-held Master Year Ltd. own 20 percent of Top Frontier while Iñigo Zobel, a member of one of the country’s wealthiest families, and pharmaceutical and condiments king Joselito Campos each hold 40 percent.

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

The Philippine government still controls a stake in SMC, which started as a brewer in 1890 when the Philippines was still a colony of Spain.

The government used to elect four seats in the 15-man board of directors of SMC using 753.848 million sequestered shares, equivalent to around 23 percent. The government’s voting power had ceased when it opted to convert its holdings, which were all common shares, into preferred shares at a ratio of one common share for one Series I preferred shares.