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Josefina Multi-Ventures Corp., a minority shareholder of Ginebra San Miguel Inc., (GSMI) is asking the Securities and Exchange Commission (SEC) to compel San Miguel Corp.’s unit San Miguel Food and Beverage Inc., (SMFB) to conduct a tender offer on a planned consolidation of GSMI under the latter, lest that consolidation be declared null and void for skirting the mandatory tender rule.
The company, which claims to own 1.84 million shares of GSMI and represented by its vice chairman Feliciano Hatud, in its petition to the SEC said the commission erred in supporting SMFB’s petition for exemption from the mandatory tender-offer in March, where it justified the transaction as merely transferring the ownership of the consolidated firms --- GSMI and San Miguel Brewery Inc. ---- to a direct ownership from being an indirect ownership post-transaction.
As part of the consolidation plan, San Miguel’s stakes in GSMI and San Miguel Brewery (SMB) will folded into SMFB, then still named San Miguel Pure Foods Co. Inc. in exchange for 4.24 billion new shares worth P336.35 billion.
SMFB will then reduce its shares’ par value to P1 from P10 apiece while increasing its authorized capital stock to P12 billion, divided into 11.6 billion common shares with a par value of P1 and P40 million preferred shares with a par value of P10, from the current P2.46 billion divided into 2.06 billion common shares and P40 million preferred shares with a par value of P10.
San Miguel is then deemed to have subscribed to 44 percent of the newly-created shares as part of the share swap, that bars existing Purefoods shareholders from exercising their pre-emptive rights.
Citing a 2003 SEC opinion 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, Josefina Ventures said the SEC ruled that a tender offer is required as outlined in the Securities Regulation Code’s (SRC) section 19.
The particular provision says once a person or group of persons acting in concert acquires at least 30 percent of any equity security of a listed corporation, such person shall make a tender offer to stockholders. This was later on raised by the SEC to 35 percent through the SRC’s implementing rules and regulations.
Josefina Ventures said the SEC simply contradicted its ruling in favoring SMFB’s petition for exemption to the tender offer rule.
“In the instant case, since SMFB will clearly acquire approximately 75 percent (more than 75 percent) of GSMI’s share, the former must make a tender offer to buy the remaining shares held by minority shareholders of GSMI at the same terms and price, and the fact that SMB and SMFB may be owned by the same controlling interest/stockholder is entirely immaterial,” Josefina Ventures said.
“If in the case of SEC Opinion No. 01-03, where the acquiring corporation is in fact wholly-owned by the selling corporation, a tender offer was deemed necessary by the selling corporation, a tender offer was deemed necessary, then with more reason that a tender offer should be observed in this case considering that SMFB is not even wholly-owned by San Miguel,” it added.
Josefina Ventures said as the law provides, once the threshold of 35 percent is reached, a tender offer is required.
“Even assuming that San Miguel and SMFB are controlled by the same entity/stockholder, and therefore, the subject share swap transaction may not actually result in a change of control insofar as GSMI is concerned, the tender offer rule will apply,” it said.
As a result of the consolidation, San Miguel earlier said it is is looking to sell 887 million shares of SMFB at P140 apiece, comprising 20 percent of the former’s stake in the latter.
San Miguel said SMFB should serve as a proxy for the Philippines’ consumption driven economy. SMFB captures 41.8 percent of the country’s food and beverage spend based on GlobalData research, the company said.
With its 128 years of operating history, and 32 well-established brands across six categories built over almost 30 years, SMFB has captured 92.7 percent of the Philipines’ beer market; 95.3 percent of the gin market; 64.5 percent in Chinese wine market; 35 percent of the branded processed meats market; 47.8 percent of the butter and spreadable fats market; 25 percent of the animal feeds market; and 23.5 percent of the poultry and fresh meats market. |
