San Miguel Food and Beverage, Inc.

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SMFB follow-on offering at risk after minority holder files suit

THE current follow-on offer of San Miguel Food and Beverage Inc. (SMFB) is at risk of being delayed after a minority holder filed a suit questioning the share-swap agreement that created the country’s largest food and beverage company.

In its petition submitted to the Securities and Exchange Commission (SEC), Josefina Multi-Ventures Corp., a minority owner of Ginebra San Miguel Inc., said the conglomerate should have made a tender offer to all the minority owners of the company when the deal was made this year.

Josefina Multi-Ventures is seeking to nullify the share swap involving San Miguel Corp.’s shares in Ginebra in exchange for shares of San Miguel Food and Beverage Inc., which the conglomerate is now planning to sell through a follow-on offering.

Jose Mario Buñag, the lawyer for Josefina Multi-Ventures, in his letter said the tender offer is mandatory since San Miguel acquired about 75 percent of SMFB under the share swap when the Securities Regulation Code requires a tender offer for all other owners of the firm for acquisitions of at least 35 percent.

The companies involved Ginebra, San Miguel Brewery Inc. (SMB) and San Miguel Pure Foods Inc., which was renamed SMFB when the deal was made.

Buñag said the conglomerate may have obtained an SEC ruling that the tender offer rules do not apply to the transaction since there is a de facto merger or consolidation or that the change in control is merely from direct to indirect.

“SMC and SEC are both wrong. In fact, the SEC flatly and inexplicably contradicts its previous ruling…involving Matsushita Electric Industrial Co. Ltd. of Japan, which wanted to transfer its shares in Matsushita Electric Philippines Corp. consisting of 80 percent of the shares to one of its wholly owned companies that a tender offer is required,” he said.

He said control did not shift from direct to indirect, since San Miguel and SMFB are two completely different publicly listed corporations with different personalities and shareholders.

San Miguel consolidated its food and beverages businesses by transferring all its equity in Ginebra and San Miguel Brewery to San Miguel Pure Foods Co. in exchange for shares.

As part of the share swap, Pure Foods increased its authorized capital so it will have more shares to issue to San Miguel in exchange for shares of Ginebra and SMB.

SMFB will raise some P141.8 billion in proceeds from its follow-on offering, through the sale of 1.02 billion common shares at a maximum price of P140 apiece. The amount of shares is equivalent to 20 percent of outstanding shares of SMFB.

Some 887 million common shares were its primary offering and 133.05 million shares as its overallotment option.


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