Japan's Kirin buys 43-per cent stake in San Miguel

21 January 2009

Japan's second-largest brewery, Kirin Holdings Co, plans to buy a 43.25-per cent stake in the beer unit of Fillipino food and beverage giant San Miguel Corp, in a deal that could cost more than 59 billion pesos ($1.26 billion). San Miguel told the stock exchange yesterday it had signed a memorandum of understanding with Kirin for its potential investment in San Miguel Brewery, Inc, the local beer leader.

San Miguel said it is looking to unload large stakes in some of its units to settle debt and fund expansion. The move is in line with the company's policy of reducing stakes in the beverages business in favour of expanding in high-growth areas like mining, infrastructure and utilities.

A final agreement will be completed by the end of February.

"As a policy, San Miguel will sell shares in all operating companies and just keep 51 per cent consolidated control," said Ramon Ang, the president of the Philippines' largest food-and-beverage conglomerate by sales. San Miguel Brewery Inc shares rose the most in Manila trading since May after the announcement, even as the main Philippine Stock Exchange Index fell.

According to experts, a stake sale to Kirin will unlock the value of San Miguel's beer business, as well as provide the opportunity for San Miguel Beer to be more aggressively marketed in Japan and in other areas that Kirin is active. Kirin shares rose 0.7 per cent in Tokyo after the deal.

The San Miguel stake would be the Japanese drinks maker's fourth overseas acquisition in a year as it seeks to counter slowing beer sales at home. The deal would give Kirin direct ownership in the biggest brewer in the Philippines and advance Kirin president Kazuyasu Kato's strategy of boosting overseas sales to 30 per cent of revenue by 2015. San Miguel has sold assets, including its Australian beverage unit to raise cash to invest in energy and mining.