Friday, August 28, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
DIVERSIFYING FOOD and beverage giant San Miguel Corp. has solidified its intent to become a major player in the infrastructure sector by acquiring a significant stake in a consortium that will construct the 88-kilometer Tarlac-Pangasinan-La Union expressway project.
San Miguel, through subsidiary Rapid Thoroughfares, Inc., signed a subscription agreement for a 35% stake in Private Infrastructure Development Corp.
The move sealed the non-binding agreement San Miguel signed with the company in July, and marked the conglomerate’s entry in the infrastructure business after investing in heavier industries like power distribution and oil refinery last year.
"The agreement is the most recent step in the company’s strategic transformation to diversify from its core food, beverage and packaging portfolio and marks its entry into infrastructure and tollways," San Miguel said.
Private Infra had said it hopes to start the construction of the tollway on September or October from original date of April, and finish the project in 2014. Depending on how things work out, San Miguel plans to increase its stake to a controlling interest of 51%.
Private Infra has filed an application with the Securities and Exchange Commission to reclassify P1 billion in preferred to common shares. The all-Filipino company also plans to increase its authorized capital stock to P4.5 billion and further increase this to P6.5 billion next month.
The P18-billion road network is expected to cut travel time from Manila to Baguio by half.
San Miguel has other infrastructure projects in mind. Earlier, the conglomerate disclosed plans to build a tollway that will connect Nueva Ecija to Cagayan Valley Road and together with Private Infra, a road from Rosario, La Union to Laoag. San Miguel has also expressed interest to acquire a stake in the operations of the Subic-Clark-Tarlac Expressway from the state-led Bases Conversion Development Authority.
In July, San Miguel President Ramon S. Ang said the investment in Private Infra was in line with diversification plans, and "we’re happy to be a catalyst for the infrastructure needs of the country."
Mr. Ang noted that the northern and central Luzon stretch is a potentially dynamic industrial corridor and the proposed expressway would make it easier and cheaper to move goods and people from one point of Luzon to another.
"As a food and beverage conglomerate with one of the most developed distribution networks in the country, we have a strong interest in making it happen," Mr. Ang said.
Since announcing plans to venture outside its traditional food and beverage businesses, San Miguel has already bought significant stakes in various companies, which include the Bank of Commerce, Manila Electric Co., and Petron Corp.
San Miguel on Wednesday entered the power generation business after winning the 620-megawatt Limay Combined Cycle Power plant in Bataan through a negotiated sale with the Power Sector Assets and Liabilities Management Corp. The group had offered $13.5 million for the plant.
The conglomerate is also the sole bidder for the Laiban Dam project of the Metropolitan Waterworks and Sewerage System.
Shares in San Miguel did not move at P65 apiece yesterday. — Kristine Jane R. Liu
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