San Miguel wins case vs shareholder over units’ merger

THE Securities and Exchange Commission (SEC) has favored San Miguel Corp. (SMC) in its dispute with a minority shareholder over a share-swap deal that merged its food and beverage businesses in 2018.

The conglomerate told the exchange on Tuesday it had received a letter from the SEC denying the appeal of Josefina Multi-Ventures Corp., a minority shareholder of SMC unit Ginebra San Miguel, Inc.

“[T]he company received yesterday, Sept. 14, 2020, a favorable decision from the SEC En Banc denying the Appeal-Memorandum of the petitioner, and affirming the decision of the SEC Special Hearing Panel dated February 19, 2019,” SMC said in Tuesday’s disclosure.

For lack of merit, the SEC dismissed the petition of Josefina last year that alleged SMC should have done a tender offer of shares to minority shareholders when it engaged in a share-swap deal with Ginebra.

To recall, SMC merged its food and beverage businesses — San Miguel Pure Foods, Inc., San Miguel Brewery, Inc., and Ginebra San Miguel — under San Miguel Food and Beverage, Inc. (SMFB) in 2018.

This entailed selling to SMFB 51.16% or 7.86 billion common shares in San Miguel Brewery, and 75.78% or 216.97 million common shares in Ginebra, and issuing 4.24 billion new common shares.

Josefina argued that the share-swap transaction should be subject to a tender offer, as SMFB’s acquisition of 75.78% of Ginebra’s total outstanding shares breaches the 35% threshold in the Securities Regulation Code.

But the SEC said otherwise, as the transaction was exempted from the tender offer rule, based on SEC’s March 2019 resolution confirming the deal.

“(The) share exchange transactions…will not result in a change of control of San Miguel Beer and Ginebra; likewise, it is exempted from the said mandatory tender offer,” it said in the resolution, quoted in the SEC March 2020 decision, shown to BusinessWorld on Tuesday.

“[Josefina] is in effect, ultimately assailing the authority of this commission to exempt SMFB, and the validity of the resolution confirming and granting such exemption,” it added. “This commission finds no convincing reason to disturb the decision of the special hearing panel, and hereby resolves to deny the appeal for lack of merit.”

Shares in SMFB increased 35 centavos or 0.55% to close at P64.50 each on Tuesday. Shares in SMC picked up 10 centavos or 0.10% to P100.50 each. — Denise A. Valdez