CONGLOMERATE San Miguel Corp. (SMC) on Monday said the Bureau of Internal Revenue has allowed a tax-free transaction that involves the merger of its food and beverage business into one larger company.
In its disclosure, the company said the agency confirmed in its decision on October 12 that it will not slap taxes when the conglomerate transfers its common shares to San Miguel Food and Beverage Inc. San Miguel will transfer to SMFB its 7.85 billion shares in San Miguel Brewery (SMB) and also its 4.24 billion shares ownership in liquor firm Ginebra San Miguel Inc.
“Accordingly, SMC will apply with the BIR for a certificate authorizing registration to effect the registration of SMFB’s ownership over the exchange shares in the stock and transfer books of SMB and GSMI,” the company said. Earlier this month, the Securities and Exchange Commission approved the follow-on offering of SMFB, creating the country’s largest food and beverage company.
The company is offering up to 1.02 billion worth of secondary shares at P140 apiece. Total net proceeds from the offer, which include the overallotment option, is at P139.86 billion.
The company needed the said offering as it already fell below the minimum public ownership rule of at least 10 percent. The conglomerate consolidated its food and beverage businesses by transferring all its equity in Ginebra and SMB to San Miguel Pure Foods Co. in exchange for shares. It then renamed Pure Foods into its current name.
As part of the share swap, Pure Foods increased its authorized capital so it will have more shares to issue to San Miguel in exchange for shares of Ginebra and SMB. The amount of shares it is selling is equivalent to 20 percent of outstanding shares of SMFB. Some 887 million common shares were its primary offering and 133.05 million shares as its overallotment option.
BDO Capital and Investment Corp. and BPI Capital Corp. were picked as the local lead underwriters and Deutsche Bank AG Hong Kong Branch and Goldman Sachs (Singapore) Pte. were picked as joint book runners.
Pricing for the offer is scheduled on October 19 and public offer will start on October 23. The shares will be crossed at the Philippine Stock Exchange on November 6.