MANILA - A former Philippine trade minister and ally of San Miguel Corp's (SMCB.PS) president on Friday led a group paying nearly $1.4 billion for a 28 percent stake in the food-to-power conglomerate, and may seek a full takeover as San Miguel shifts into high-growth heavy industry and infrastructure.

Top Frontier Investment Holdings, whose main shareholders include Roberto Ongpin, said it paid 64.3 billion pesos for the stake in San Miguel.

San Miguel is a very sound investment, with a strong balance sheet to support the new business endeavours which are clearly the future engines of growth, Ongpin said.

Ongpin also controls nearly a third of Q-Tech Alliance Holdings Inc, which bought a 20 percent stake in San Miguel in February from Japanese brewer Kirin Holdings Co Ltd (2503.T) for almost 40 billion pesos.

Ongpin said he was in talks with both Top Frontier and Q-Tech shareholders to consolidate their San Miguel stakes. That would take the group's ownership to 48 percent, above a 35 percent trigger for a tender offer.

Subject to the outcome of these discussions ... a tender offer will be undertaken in accordance with law at a price of 75 pesos per share, Ongpin said in a statement.

The deal consolidates control of San Miguel in the hands of its president Ramon Ang and Ongpin just as the Philppines' third-largest listed firm is shifting from food and drinks into power and toll roads and is battling for control of utility Manila Electric (MER.PS), whose optical fibre network it wants to exploit as it ventures into telecommunications.

San Miguel's A shares, which are open only to Filipinos, jumped 5.3 percent and its B shares (SMC.PS), which foreigners can buy, rose 4.6 percent in a benchmark index .PSI that fell 1.5 percent.


Analysts said the sale of a big stake to a key ally may be part of a strategy by Ang and San Miguel Chairman Eduardo Cojuangco to strengthen ownership of the group during its high-profile strategic shift.

It's better to have a consolidated, rather than fragmented board, as that will have some benefit to San Miguel especially in terms of raising the capital they need, said Jomar Lacson, head of research at local broker Campos, Lanuza & Co Inc.

Top Frontier bought 857.12 million shares from the San Miguel retirement fund at 75 pesos each, which Ongpin said was funded through a combination of equity and foreign borrowings. About 87 percent of the shares were A shares.

Top Frontier has long harboured an interest in San Miguel.

Last year, it offered to buy a contested 24 percent stake in San Miguel, also at 75 pesos a share, which at the time represented an 82 percent premium to the market price.

A coconut farmers' group had been battling the government for more than 20 years for the 24 percent San Miguel stake which they say belongs to them because it was acquired using an illegal levy collected from farmers during the discredited Marcos regime.

The Supreme Court has yet to rule on the contested stake. ($1=47.15 pesos) (Editing by Valerie Lee and Ian Geoghegan)