San Miguel brewery unit gains 6 percent on debut

Mon May 12, 2008 4:48am EDT

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By Rosemarie Francisco

MANILA (Reuters) - San Miguel Brewery (SMB.PS: Quote, Profile, Research, Stock Buzz), the crown jewel of Southeast Asia's biggest food and drinks conglomerate, rose over 6 percent on its debut on Monday after its parent shrank its IPO price range and halved the number of shares on offer to sell the deal in a turbulent market.

San Miguel Corp (SMC.PS: Quote, Profile, Research, Stock Buzz)(SMCB.PS: Quote, Profile, Research, Stock Buzz) President Ramon Ang said the company would focus on its home Philippine market for now after listing 5 percent of its flagship domestic brewery.

But some analysts said the San Miguel group still needed to clarify its business strategy to investors.

San Miguel stunned investors last May when it said that it wanted to diversify into heavy industry in its home market. Its B shares (SMCB.PS: Quote, Profile, Research, Stock Buzz), open to all investors, have lost around 35 percent of their value since the announcement.

"It's good that they are sticking to their domestic business," said an analyst from a foreign brokerage house who asked for anonymity. "But the question is what investment are they really considering? Do they have a strategy and what is it?"

Shares of San Miguel Brewery closed at 8.50 pesos (20 U.S. cents) against an offer price of 8 pesos per share in an IPO that valued the company at around $2.9 billion. Shares of the group fell 1 percent, lagging a higher broader market .PSI.

Turbulent financial markets and investor complaints that the offer was too expensive had forced San Miguel to twice shrink the price range and halve the numbers of shares on offer, reducing what was shaping up to be the Philippines' biggest-ever IPO to $147 million.

San Miguel Corp is planning to list its packaging business and conduct a follow-on offer after consolidating its food assets under Pure Foods Corp (PF.PS: Quote, Profile, Research, Stock Buzz) (PFB.PS: Quote, Profile, Research, Stock Buzz) in the first quarter of 2009, Ang said. Continued...