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San Miguel-Kirin deal Philippines delays review

The Philippine cabinet postponed a review of the sale of a 15 percent stake in San Miguel Corp to Kirin Brewery Co Ltd in mid-December 2001 as several senior officials were held up in Congress, a spok…

The Philippine cabinet postponed a review of the sale of a 15 percent stake in San Miguel Corp to Kirin Brewery Co Ltd in mid-December 2001 as several senior officials were held up in Congress, a spokesman said. The government said it would review the San Miguel-Kirin deal to ensure its interests in the top Philippine food and beverage firm would not be diminished by the transaction. Presidential spokesman Rigoberto Tiglao said that the review had been taken off the agenda of the weekly cabinet meeting since most senior economic officials were involved in 2002 budget deliberations in Congress. He did not give a new review date. Meanwhile, San Miguel said it had set a special stockholders meeting on February 27 2002 to approve proposals related to the planned stake sale to Kirin, Asia“s largest brewer. The deal was expected to put the Japanese brewer on a par with US firm Miller as the world“s sixth largest brewing group by sales. Kirinwas seeking the deal to expand its hold in Asia while San Miguel was eyeing the Japanese brewer“s network to allow it to penetrate more markets in the region. San Miguel said in a disclosure to the stock exchange it would present a plan to shareholders to waive stockholders“ pre-emptive rights over 442.56 million common “B” shares to be issued to Kirin. The shares are worth PHP 63 each, with the total transaction amounting to PHP 27.9 billion. San Miguel also plans to increase its authorized capital stock to PHP 22.5 billion from the current 15 billion to accommodate the Kirin transaction. The deal, however, is muddled by government efforts to get its authorized representatives to the board of San Miguel and court cases on the ownership of a block of shares equivalent to about 52.7% in the company. The government took over a 47% block in 1986 on suspicion the shares were bought with a levy illegally collected from coconut farmers under the late dictator Ferdinand Marcos. Of this, some 20% was claimed by San Miguel chairman Eduardo Cojuangco as his own investment. In 1998, the court gave him voting rights but no other privileges over this stake. The other 27% is being claimed by coconut farmers and a private coconut producers group. Following a share buy-back in 2001, the Cojuangco-claimed stake increased to 22.1% while the stake claimed by coconut farmers rose to 30.6%, San Miguel said. The government currently has voting rights on the 30.6% stake. It said the five current state representatives to the San Miguel board were not authorized as they had been appointed by the government of former President Joseph Estrada. Nominations to the San Miguel board ended prior to the change in government in January 2001, preventing President Gloria Macapagal Arroyo from nominating her representatives.

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