Insider Flash: Philippine San Miguel discloses Coca-Cola payment details

MANILA (MarketWatch) -- San Miguel Corp. (SMCB.PH), the Philippines' largest food and beverage conglomerate by sales, Thursday provided a breakdown of the amount it will receive for selling its controlling stake in its soft drinks joint venture with Coca-Cola Co. (KO).

San Miguel said last week it will receive $590 million from Coca-Cola for its entire 65% stake in Coca-Cola Bottlers Philippines Inc. It didn't elaborate.

Thursday, San Miguel said Coca-Cola South Asia Holdings will pay the company an initial $370 million and deposit another $100 million with a third-party agent who will disburse the amount after the closing of some financial accounts which may result in a purchase price adjustment.

San Miguel said another $20 million will be paid by Coca-Cola South Asia 18 months after the deal's closing, while another $100 million will be paid on the fifth year of the deal.

San Miguel's sale agreement prevents it from producing either for itself or Coca-Cola's competitors nonalcoholic beverages in the Philippines for five years and elsewhere in the world for three years.

Aside from divesting itself of a drag to bottomline - Coca-Cola Bottlers has been suffering losses for years - San Miguel will also raise funds to ease the burden of debts it had taken on to fund an aggressive expansion overseas. It had bought several companies abroad in recent years, the biggest of which is Australia's dairy company National Foods Ltd.

-Edited by Rosalyn Lim
Source: Marketwatch.com Last Update: 6:24 AM ET Jan 4, 2007

Note:  You are receiving this message as a service from CBAS Cluster Marketing, updating key personnel within the CBAS organization of new and exciting developments within the packaging industry.  If you would like to discontinue receiving this particular update via email from CBAS Cluster Marketing, simply reply to this message with the word 'unsubscribe' in the subject line.  Additionally, if you are a supervisor/director and feel that there are additional individuals within your department/team that should receive this update, please inform us accordingly. 

Insider Flash: San Miguel taps Thai health trend

11/01/2007 - San Miguel plans to launch a new water brand and a range of functional beverages in Thailand as part of its strategy to gain a leading position in this market, reveals a report.

The Philippines-based company, already one of south-east Asia's biggest food and drink producers, made its first steps in the Thai beverage market when it bought a brewery from Thai Amarit Brewery in 2004.

But the acquisition of Australia's National Foods in 2005 gave it a new premium juice brand (Berri), which has recently been introduced into Thailand.

Now it wants to become a major player in the country's beverage market by adding an extensive range of non-alcoholic drinks.

"We want to make ourselves a key player in the overall beverage market in Thailand in the next three to five years," Chirawan Assavanich, San Miguel's Thailand marketing and sales director, told The Nation newspaper last week.

Next month, the company will introduce a new drinking water under the Nam Fa brand, initially on test markets in the eastern region, including Chon Buri and Rayong. "We are also interested in launching other non-alcoholic beverages, such as functional drinks, which have high market potential," Assavanich told the paper.

Thai consumers are increasingly interested in healthy foods and beverages, a trend that is reflected in the growing fruit juice market. Juice drinks have been growing annually by 10.7 per cent, reaching around 109 million litres in 2004 or US$90 million, according to the US Foreign Agricultural Service.

San Miguel estimates Thailand's total fruit-juice market to be worth BT5 billion (€107m), with about 40 per cent of sales from pure fruit juice products and the rest from juice drinks.

Domestic player Tipco claims to have a 43 per cent share of the high-end segment of pure fruit and vegetable juice.
The company expects its Berri imported 100-per-cent fruit juice to generate sales of BT10 million this year, according to the report. A further BT200 million will be earned by its SunBlest 40-per-cent juice, produced in a recently completed factory in Rayong since October last year.

Source: ap-foodtechnology.com

Insider Flash: Foreign investors buy stake in Chinese milk drink maker

09/01/2007 - Three private equity groups have spent US$73 million on a stake in Chinese firm Taizini, a producer of probiotic milk drinks.

UK-based Actis Capital, Morgan Stanley and Goldman Sachs Group acquired about a third of the Hunan dairy company's shares during December, said its investment director Yao Xin.

China's dairy industry is growing rapidly and all of the leading players have already attracted foreign investment. The next wave of investment is therefore expected to be in smaller, regional dairies such as Taizini.

The Hunan company's focus on probiotic products, still very new to the Chinese market, has made it an attractive buy. Probiotic bacteria such as lactobacillus are said to protect the health of the digestive system and also boost immunity, and Chinese consumers are known to be interested in the health benefits of foods.

Taizinai, set up in 1997, now claims to have a 76.2 per cent share of China's probiotic drinks market. But the sector is still small compared with that of Europe and Japan. Probiotic dairy products account for less than 5 per cent of China's total dairy market, compared with about 80 per cent in Japan and Europe.

"In China, this [probiotic] sector is developing by 25 per cent every year, which demonstrates huge demand and great market potential," Yao told AP-Foodtechnology.com.

Taizinai plans to use the proceeds of the share sale to build two new factories in Jiangsu and Sichuan provinces, Yao said. Currently, the company has five research and production sites in Hunan, Beijing, Hubei, Jiangsu and Sichuan provinces.

In addition, Taizinai is planning an IPO although it has not yet decided where it will list. A Bloomberg report said that the firm has met with NYSE group chief executive John Thain to discuss a potential New York share sale.

"Yao said preparation for the listing "should probably be finished by the middle of this year" .

Company chairman Li Tuchun told the China Daily that after listing the firm will make a series of mergers and acquisitions, targeting both domestic and overseas manufacturers.

Taizinai is aiming to grow its sales from CNY1.8 billion (€177m) last year to CNY10 billion in three years. By 2017, the company's revenue is expected to reach CNY100 billion, Li told the paper.

Of the new owners, Actis, which is also an investor in one of China's biggest dairies, Mengniu, invested the biggest amount in Taizinai - US$40 million - while Morgan Stanley invested US$18 million and Goldman Sachs US$15 million.

The rest of the shares are owned by Li and senior management.
Source: ap-foodtechnology.com