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Would You Buy San Miguel Food and Beverage Shares After Target Price Lowered from Php140 to Php85-95?

The new target price is now within range of recent price movements
By Pauline Macaraeg |

 

 

San Miguel Food and Beverage Inc. (SMFB) lowered the offering price of its planned share sale to Php85 to Php95 apiece from the original offer of up to Php140, the company stated in a disclosure to the Philippine Stock Exchange on October 18, Thursday. It announced the Php140 target offer price in August.

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The company, now the largest food and beverage firm in the country, is offering up to 1.02 billion shares acording to the preliminary prospectus dated October 18. It will be composed of the 887 million common shares with an over-allotment option of up to 133.05 million shares.

 

That also cut the total proceeds of the offering to between Php86.7 billion and Php96.9 billion compared to Php142 billion originally.

 

SMFB’s new offer price range of Php85 to Php95 comes closer to the company’s historical share prices over the past year, which was traded at an average of Php65.9 apiece. The highest price it reached was Php104, still too low from the original offer price of Php140. (see graph) The company was still trading under the name San Miguel Pure Foods Co. until late August 2018.

 

SMFB set October 25 as the indicative date of pricing. The settlement and delivery of shares are scheduled on November 12.

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“The entire proceeds from this Offer will be used by SMC for investments in the San Miguel Group. The board of directors of SMC authorized its management to make any such additional investments, at such time and in such amount as management may deem appropriate, taking into consideration the capital requirements of such investment, including funding requirements of the relevant projects, and opportunities and developments in the relevant industries,” the company said in the disclosure.

 

Interested investors are advised to read through the preliminary prospectus first, which can be found on the company’s official website.

 

The joint bookrunners for the offering are Deutsche Bank AG, Hong Kong Branch and Goldman Sachs (Singapore) Pte. The local lead underwriters are BDO Capital & Investment Corporation and BPI Capital Corporation

 

As of October 19, SMFB ranks as the sixth biggest listed firm by market capitalization in the country, followed by San Miguel Corporation at seventh place. The diversified conglomerate is headed by tycoon Ramon Ang, the eighth richest person in the Philippines with a net worth of $2.6 billion, according to Forbes magazine.

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