San Miguel snaps up soft drink maker

By Rufi Vigilar

MANILA, Philippines (CNN) -- San Miguel Corporation, the Philippines' largest food and beverage company, has moved one step closer to a near-monopoly of the Philippine soft drink market.

In a disclosure to the Philippine Stock Exchange on Friday, San Miguel said its board has approved the purchase of RFM Corporation's 83.2 percent stake in soft drink firm Cosmos Bottling Corporation.

Earlier this year, San Miguel acquired a 65 percent stake in Coca-Cola Bottlers Philippines Inc., which controls at least 60 percent of the local softdrinks market.

The estimated sale price of Cosmos, which corners at least 25 percent of the market, is 13 billion to 15 billion pesos ($28 million).

Local media earlier reported that San Miguel and Coca-Cola had offered 14.5 billion pesos ($27.1 million).

"No agreements have been reached as to price, structure or other details," San Miguel said.

Diligence checks

However, RFM vice president for corporate planning, Ramon Lopez, said Friday that there is "a good and clear indication that talks are now limited to the parties concerned."

A memorandum of understanding will be signed next week, Lopez also said.

Due diligence checks on Cosmos would take some 30 days, he added.

San Miguel is expected to post stronger gains in the second half if the Cosmos acquisition is finalized.

Coca-Cola Philippines contributed 6.7 billion pesos in sales from May to June, San Miguel said.

Meanwhile, Cosmos posted a net income of 210.5 million pesos from January to March.

The sale of Cosmos would also help RFM meet its profit target of 350 million pesos ($6.55 million), after losing some 520 million pesos last year.

San Miguel also announced its beer, soft drink and meat sales rose 35 percent in the first half, from 42 to 57.3 billion ($1.1 billion) from a year ago.

Earlier this year, San Miguel acquired a 94 percent stake in Purefoods, which sold some 3.9 billion in hotdogs and canned meat in the second quarter.