San Miguel consolidates stake of Ongpin-led firm

San Miguel Corp. will buy half of Top Frontier Holdings, Inc. in what appears to be a move to consolidate its shareholdings under the holding company owned by a group led by former Trade Minister Roberto Ongpin, businessman Iñigo Zobel and condiment king Jose Campos. San Miguel told the Philippine Stock Exchange on Wednesday its board had approved an investment in Top Frontier Holdings, Inc. by buying a 49-percent stake in the company via equity infusion, a move it said was a step towards broadening its shareholder base. Under the plan, Top Frontier — an investment holding company that owns 26 percent of San Miguel — will buy up to about 19 percent of the beer giant’s common shares held by another Ongpin firm, Q-Tech Alliance Holdings, Inc. Specifically, Top Frontier will buy 327 million San Miguel common shares held by Q-Tech and an option to buy the balance of 302 million shares, aside from rights over various major mining assets. Top Frontier will then make a tender offer for San Miguel common shares at P75 apiece. The tender offer — a takeover bid in the form of a public invitation to shareholders to sell their stocks, generally at a price above the market price — is targeted for March. Given his interest in both companies, Ongpin earlier initiated discussions with the other shareholders of Top Frontier and Q-tech to consider the merits of a consolidation. Analyst Jose Mari B. Lacson of Campos, Lanuza & Co., Inc. said the transactions are meant to consolidate the San Miguel shares under Top Frontier. "It's still the same board and management. It's just a left-to-right pocket transaction," he said in an interview. He also said the capital restructuring activities “don’t really add value to the company." “Maybe the top shareholders like Top Frontier, Q-Tech and the people behind them want to consolidate… If they want to create a single block for them to control or own, it’s fine. But it’s more for them," he pointed out. As agreed by both San Miguel and Top Frontier, the composition of the SMC board and management will remain the same. “Top Frontier has agreed to ensure the pursuit of the strategic direction of San Miguel to diversify into infrastructure, telecommunications, mining, energy and related industries," the company told the stock exchange. “The board is confident that an investment by San Miguel in Top Frontier is in the long-term interest of the shareholders of San Miguel," company President and Chief Operating Officer Ramon S. Ang said. “This investment will ensure continuity of the ongoing business operations and strategic plan of Sang Miguel and the stability of its organization. It is a step towards broadening the shareholder base of San Miguel," he added. Top Frontier was incorporated in March 2008 with Ongpin, Zobel and Campos as major shareholders, together with Master Year Limited, a foreign-owned company. Ongpin, together with Master Year Limited, holds about 20 percent of Top Frontier, while Zobel and Campos each own 40 percent. Ongpin, Zobel and Campos were likewise the key players behind Global 5000 Investments Inc., a key ally of San Miguel in Manila Electric Co. San Miguel has been aggressively venturing outside its core food and beverage business by acquiring stakes in major companies in the power, water and telecommunication sectors, among others. San Miguel A shares, which are restricted to Filipinos, closed 50 centavos lower at P67.50 on Wednesday. Its B shares, open to both locals and foreigners, were likewise down by 50 centavos to P67.50. — Norman P. Aquino, GMANews.TV