E-Malt.com News article: Japan & Philippines: Kirin interested in buying the rest of San Miguel Brewery Inc. if approached

Kirin Holdings Co., Japan’s biggest drinks company, is interested in buying the rest of Philippine beverage maker San Miguel Brewery Inc. if approached, a person with knowledge of the matter was quoted as saying by Bloomberg on November 1.

Kirin, which holds about 48 percent of the brewer, isn’t in talks with co-owner San Miguel Corp., said the person, who asked not to be identified because the deliberations are private. The Japanese company would consider a deal should San Miguel offer to sell its 51 percent stake to Kirin, the person said.

A valuation of about 20 times earnings before interest, taxes, depreciation and amortization is now “normal” for deals in the industry, San Miguel President Ramon Ang said via text message. That multiple implies a $5.9 billion price for the stake, based on the brewer’s Ebitda last year, data compiled by Bloomberg show.

“Other major international brewers such as InBev and SABMiller would definitely be interested,” said Mikihiko Yamato, deputy head of research at JI Asia in Tokyo. “It’s possible that the price skyrockets. The brewery is almost a monopoly in the Philippines.”

The media relations departments of Anheuser-Busch InBev NV and SABMiller Plc couldn’t be reached outside regular office hours in Europe.

Buying the remaining shares in San Miguel Brewery would help Kirin gain control over a beverage maker that sells 9 of 10 beers in the Philippines. Kirin failed in its efforts to acquire the food and drinks business of Singapore-based Fraser & Neave Ltd. earlier this year.

The median price-to-Ebitda ratio in brewery acquisitions above $1 billion announced in the past five years is 13, according to data compiled by Bloomberg. San Miguel Brewery reported earnings of 24.9 billion pesos ($575 million) on that basis in 2012.

Heineken NV paid S$5.6 billion ($4.5 billion), or 17.3 times Ebitda, last year to take control of Asia Pacific Breweries, the maker of Tiger beer, data compiled by Bloomberg show.

Kirin is expanding abroad amid Japan’s weakening demand for beer and similar drinks, which declined for an eighth straight year in 2012. It bought a 48 percent stake in San Miguel Brewery in 2009 for 131.6 billion yen ($1.3 billion). The beermaker’s portfolio of 10 brands includes the namesake San Miguel Pale Pilsen.

“Kirin would definitely be interested too,” in the additional stake, Yamato, the analyst said. “The near monopoly means that unlike in the Japan market, it woudn’t have to spend much on advertising.”

Kan Yamamoto, a spokesman for Kirin, declined to comment.

San Miguel is selling assets to bankroll a $35 billion investment plan to expand in airlines, energy and infrastructure. Ang said on Oct. 29 that “several parties” have approached the company about buying its majority stake in the Philippines’ biggest brewer.

“We’re not selling it,” Ang said earlier this week in Manila of the 51 percent holding in San Miguel Brewery. “But of course I’m not the only one who would decide.” He said the company also received offers for its food and packaging units, declining to identify any suitors.


01 November, 2013