DIVERSIFIED conglomerate San Miguel Corp. (SMC) has received clearance from the Bureau of Internal Revenue (BIR) for the tax-free transfer of its common shares to its newly consolidated food and beverage unit.
In a disclosure to the stock exchange on Monday, SMC said the BIR issued last Friday BIR Rule No. 010-2018, confirming the tax-free transfer of its common shares in San Miguel Brewery, Inc. (SMB) and Ginebra San Miguel, Inc. (GSMI) to San Miguel Food and Beverage, Inc. (SMFB).
The share swap transaction includes the transfer of 7.86 billion shares in SMB and 216.97 million shares in GSMI to SMFB, in exchange for 4.24 billion new common shares in SMFB to be issued to SMC out of its capital increase. The transaction is valued at P336.35 billion.
With the tax exemption, SMC said it will apply for a certificate authorizing registration of SMFB’s ownership over the SMB and GSMI shares in the stock and transfer books of the two companies.
The transaction forms part of SMC’s consolidation of its traditional businesses under SMFB, which now holds its liquor, brewery, and food and beverage units. Following the share swap, SMFB now holds 51.16% and 78.26% in SMB and GSMI, respectively. SMC will also increase its stake in SMFB to 95.87% from 85.37%.
The consolidation intends to create a “significant consumer food and beverage vertical market under SMC,” while also aiming to enhance its trading liquidity.
SMFB is now looking to raise up to P142 billion in a follow-on offering to comply with the minimum public ownership rule of 10%, as its public float fell to 4.12% after the share swap.
The company has already secured approval from the Securities and Exchange Commission to proceed with the share sale, consisting of a base size of 887 million shares and an over-allotment option of 133.05 million shares priced up to P140 each. Funds raised from the offering will be used to fund SMC’s infrastructure projects.
The share sale is currently awaiting approval from the Philippine Stock Exchange.
As per its latest prospectus, SMFB targets to price the offering by Oct. 19, with the offering to run from Oct. 23 to 29. The shares will then be crossed at the exchange by Nov. 6.
SMFB’s net income expanded by 20% to P15.4 billion in the first six months of 2018, following the 15% increase in consolidated revenues to P137.4 billion.
Shares in SMFB went up by 1.12% or a peso to close at P90.50 each at the stock exchange on Monday. — Arra B. Francia
