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San Miguel eyes Sabeco

Released at: 11:34, 03/04/2017

San Miguel eyes Sabeco

Photo: Archives

Filipino brewer expresses interest in securing a stake in Vietnamese brewer during upcoming sale.

by Duy Anh

San Miguel Corp., which sells nine out of every ten beers in the Philippines, plans to bid for the Saigon Beer Alcohol Beverage Corp (Sabeco), Vietnam’s leading beer producer. 

“At the moment, we are evaluating the deal and we will definitely join the public bidding for the sale of Saigon Brewery,” San Miguel President and CEO Mr. Ramon Ang told reporters on March 31.

Vietnam may provide an anchor to increase its brewery business as consumption in the country is growing at an annual rate of at least 10 per cent, five times that in the Philippines, he said.

Sabeco, Vietnam’s largest brewer, with a 40 per cent market share, has received government approval to hire consultants to advise on the State-owned company’s planned share sale this year. Heineken NV, Anheuser-Busch InBev NV, and Asahi Group Holdings are among seven foreign companies that previously registered to bid.

The Vietnamese Government announced in September last year its plan to sell its entire 89.59 per cent holding in Sabeco for $1.8 billion and its 82 per cent stake in Hanoi Beer Alcohol Beverage Corp. (Habeco) for $404 million.

Saigon Beer, which listed about 641.3 million shares at an initial price of VND110,000 ($4.84) on December 6, reported net profit of $205 million in 2016, up 33 per cent against 2015. After the trading session on March 31, its shares closed at VND200,000 ($8.8).

Neither Sabeco nor the Ministry of Industry and Trade (MoIT), the government’s representative of capital in Sabeco, were available for comment.

With San Miguel now joining the competition, the sale of Sabeco shares may begin soon. Mr. Phan Dang Tuat, Head of MoIT’s Enterprise Reform Commission, told foreign media in December that the process will kick off in April. The size of the stake is still to be decided, with reports from those in the know putting the figure at at least 40 per cent in one sale.

One thing is certain, though: the price of Sabeco’s shares will now be higher due to the absence of the TPP, as the trade pact would have removed the 47 per cent duty on beer imports Vietnam imposes. With the TPP now unlikely to proceed, not only will the southern brewer retain a huge advantage in the local market thanks to import tariffs, the government could also gain more from the sale.

The only question is whether the government prefers to sell a majority of Sabeco in one hit or prefers a “bits and pieces” approach, like the State Capital Investment Corporation (SCIC) did with Vinamilk. The measly 9 per cent on offer, however, caused some disquiet among the dairy giant’s potential shareholders, with 3.6 per cent on offer remaining untouched.

Vietnam, where beer sales are forecast to expand at an annual rate of 7.2 per cent by 2020, will see its burgeoning middle class triple to 33 million over the next four years. Beer consumption in 2016 was forecast to rise 4.1 per cent to 4 billion liters from 2015; the highest in ASEAN, according to Euromonitor International.

Sabeco has been equitized before, as has Habeco, with the State selling 5 per cent to Dutch brewer Heineken in 2008. 

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