Food giant San Miguel diversifies further

By Kacey Culliney

- Last updated on GMT

Related tags: San miguel, Petroleum

Philippines-based food giant San Miguel Corporation will acquire US-based ExxonMobil’s Malaysian business in a $610m deal signed last Wednesday.

The acquisition marks San Miguel’s second oil company acquisition after Petron in April last year. It will take on three subsidiaries in Malaysia engaged in refinery, distribution and marketing of petroleum products. The physical assets acquired include the Port Dickson refinery, seven fuel distribution terminals and a network of approximately 560 branded service stations.

New business ventures

There is a strong diversification focus in San Miguel Corporation as part of its growth strategy and its chairman and CEO, Eduardo M. Cojuangco said: “We are continuously benefitting from our strategic shift to high-growth businesses. We are confident we can bring in more value to our shareholders from the company’s ongoing diversification.”

He also said the company will be extracting synergies between its core businesses and its new acquisitions.

San Miguel Corporation is Southeast Asia’s largest publicly listed food, beverage and packaging company with over 100 major facilities throughout Asia-Pacific and its products are exported to 60 markets around the world. Its food and beverage business has been the stronghold and core focus since its establishment in 1890 as a brewery but the company now has focuses in new business areas such as fuel and oil, power and energy and mining.

San Miguel said the mix of its new businesses has already provided fast-growing streams of revenue. Its EBTDA is up 117% from 18.5bn pesos ($434m) in 2010 to 40.2bn pesos ($943m) in 2011. Cojuango said he has confidence that the company’s strategy of diversifying into non-allied industries will help spur economic growth and secure its future.

San Miguel began its diversification plan in 2007, and in April 2010 acquired Petron Corporation, beginning it fuel and oil venture. Petron is now the largest integrated oil refinery and marketing company in the Philippines and its refinery is being upgraded to allow full conversion of fuel oil production to higher-value products such as gasoline, diesel and petrochemicals.

The president and chief operating officer of San Miguel Corporation, Ramon Ang said: “This acquisition provides us with a unique opportunity to expand our participation in the regional oil and gas sector, and we will focus our efforts not just on upgrading refinery capabilities, but expanding reach into underserved areas in the fuel markets.”

ExxonMobil is the largest international oil and gas company and has a long business history in Malaysia, dating back to 1893. This deal marks a refocusing of its operations. However, the company said it remains committed to Malaysia as a producer and supplier of crude, lubricants, asphalt, waxes and chemical products.

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