San Miguel to bid for United Biscuits alone

 

 

San Miguel Corp., the Philippines' most diversified conglomerate, said it was planning a solo bid for British snacks maker United Biscuits, owner of brands such as Jaffa Cakes and Twiglets.

 

The potential acquisition is a positive move given San Miguel's expertise in its traditional food and brewery businesses, though analyst say they are worried about the group's high debt levels.

 

"No need for partner," San Miguel President Ramon Ang said in a mobile text-message to Reuters on Friday when asked if the group was considering a joint bid with other firms.

 

United Biscuits' private equity owners, Blackstone Group and PAI Partners, have been working on plans for a sale or a public share listing by the end of the year. The auction for United Biscuits is reported to be worth £2 billion ($3.25 billion).

 

Freya Natividad, investment analyst at Papa Securities Corp. in Manila, said buying into United Biscuits would diversify the product line of San Miguel's subsidiary San Miguel Pure Foods Co. Inc., which is into fresh and processed meats, commercial feeds and flour.

 

"It makes business sense for San Miguel to go into this type of business because it has synergies with what they have learned in the food and brewery business," said Luis Limlingan, head of business development at Regina Capital Development Corp in Manila.

 

However, Limlingan said he was wary of where San Miguel will source the required cash for the acquisition.

 

The group is already highly-leveraged, Papa Securities' Natividad said. As of end-June, San Miguel had P787.7 billion ($17.91 billion) in total liabilities while total assets stood at P1.2 trillion. 

 

The plan to pursue United Biscuits alone comes as San Miguel sells its holding in Philippine Airlines. The group said on Monday that it had signed a deal to sell its 49 percent stake in the carrier back to the group of tycoon Lucio Tan, in a transaction worth $1 billion.

 

Shares of San Miguel have dropped 0.7 percent since it disclosed its plan to woo United Biscuits on Sept. 10.

 

Since its establishment as a brewery in 1890, San Miguel has invested in packaging, power generation, petroleum and toll roads. – Reuters