Image via WikipediaJuly 28 - Shares in San Miguel surged 10 percent on Wednesday after the Philippine conglomerate said it could raise around $1.6 billion by selling shares and would pay a special dividend.On Tuesday, San Miguel said its board had approved an offer of approximately 1 billion shares, from unissued capital stock and treasury shares, with a floor price of 75 pesos, to fund acquisitions and investments.
The company also announced a dividend of 0.35 pesos and a special dividend of 5 pesos per share, with a record date of Aug. 10.
"I think the main driver is more of the high yield that the dividend would generate based on yesterday's closing price. The yield is above 7 percent, so it was basically the attractive yield," said Jose Vistan of AB Capital Securities.
The company's B shares, which are open to all investors, closed up 9.5 percent at 75 pesos, having matched their 2010 high of 76 pesos during trade. Volume topped 140,000 shares, more than 10 times the average volume over the past 30 days.
Its A shares, restricted to locals, ended up 10 percent at 74.8 pesos, having hit a 3-year high of 76 pesos during trade. More than 390,000 shares were traded, about 7 times their recent daily average.
"It is more on the cash dividend that they will be giving come August. There are some interest on the investor side, given that the yield will be around 7.9 percent," said Ron Rodrigo of DBP-Daiwa Capital Markets Philippines.
SHARE SALE
The 120-year-old conglomerate, which makes 9 out of every 10 beers sold in the Philippines, is aggressively diversifying away from its traditional food and drinks businesses into high growth areas like power, mining, oil refinery, telecommunications and infrastructure.
Apart from the share sale, the company is also in the process of selling a minority stake in its San Miguel Pure Foods Co Inc unit..
RLPC reported on Tuesday bankers had launched an $880 million loan for San Miguel.
The company is in talks to buy stakes in railways, toll roads, airport projects and coal mines.
San Miguel is now one of the country's biggest power players, after it secured state contracts to operate and manage the output of four power plants on the main island of Luzon with a combined capacity of more than 3,000 megawatts.
Its power portfolio accounts for 28 percent of the power grid on Luzon and 21 percent of the national grid.
A spokeswoman for San Miguel said the company had 4.5 billion authorised shares, of which 3.275 billion were on issue.
The spokeswoman said San Miguel held 65.5 million treasury shares. That would mean most of the approximately 1 billion shares to be sold would come from unissued stock, diluting the value of current holdings.
The company has a small free float -- Reuters data shows it at around 11-12 percent -- with most stock held by a group called Top Frontier, related entities and San Miguel management. San Miguel in turn owns a stake in Top Frontier.
"On the dilution, it will happen within the year but no finality yet, so that is why investors are more focused on the cash dividend that company will give come August," said DBP-Daiwa's Rodrigo.
Tuesday's brief statement on the share sale did not mention a timing or any details of the sale process, such as whether it would include a rights issue for existing shareholders.
Earlier this year, San Miguel got shareholder approval to issue new shares "without attendent preemptive rights", and to create a common stock instead of having A and B shares.
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