San Miguel Corp. (SMC), the country’s largest food and beverage company, will seek to raise at least $500 million to help fund expansion by selling a 49-percent stake in its San Miguel Pure Foods Co. Inc. unit.

SMC also intends to sell stakes in its “traditional and nontraditional” businesses and keep its holdings in these units at 51 percent, SMC president Ramon Ang told reporters after a San Miguel Pure Foods stockholders meeting on Friday.

SMC, which has been a brewer for more than a century, has expanded into heavy industries to boost return on equity to three times the 7-percent level it used to earn from food and drinks. The company ended talks in August to sell San Miguel Pure Foods for more than $1 billion after failing to agree on terms with a prospective buyer.

“We will pursue the sale,” Ang said. “If we sell up to 49 percent, we could raise at least $500 million.”

SMC will initially sell a 10-percent stake in San Miguel Pure Foods to meet the Philippine Stock Exchange’s minimum requirement on public ownership, Ang said.

“It’s always been San Miguel’s plan to sell part of its assets to raise cash for expansion,” said Peter Lee, senior investment officer at IGC Securities Inc. “San Miguel has to raise funds if it wants to keep its pace of expansion into capital-intensive industries.”

First-quarter profit at SMC more than doubled to P7.14 billion from 2.9 billion a year earlier, boosted by investments that included a controlling stake in the nation’s biggest oil refiner, the company reported on Thursday.

SMC shares rose 0.1 percent to P111 on Friday, before Ang’s announcement, ending three days of declines.

San Miguel Pure Foods on Friday said the company continued to deliver strong results in the first quarter of the year following a “record-breaking performance” for 2010.

In a disclosure to the Philippine Stock Exchange, the company said net income grew 26 percent to P1.1 billion in the first quarter from P871.7 million in the same period last year.

First-quarter revenues, meanwhile, reached P20.6 billion, up 13 percent year-on-year, while operating income rose 15 percent to P1.6 billion.

For the full-year 2010, the company said it posted all-time high revenues of P79.3 billion, a 6-percent improvement.

The food firm’s income from operations went up to P5.9 billion, up 27 percent from the previous year.  As a result, it said net income grew 53 percent to P4.1billion. 

(Bloomberg News)