The Philippines: San Miguel Corp., the Philippine beer company that's vying to buy National Foods Ltd., led the week's borrowers in Asia as it arranged a $1.85 billion loan to back its bid to acquire the Australian company, Bloomberg revealed on January 28. The brewer hired ABN Amro Holding NV, Barclays Plc, HSBC Holdings Plc, Sumitomo Mitsui Banking Corp., Standard Chartered Plc and ING Groep NV to arrange the nine-month credit to help fund its A$1.78 billion ($1.4 billion) offer, the banks said in a joint news release on Jan. 26. National Foods is Australia's largest dairy company.
San Miguel is among the rising number of companies in the region looking beyond their home countries for bigger markets or cheaper resources. Domestic and cross-border mergers and acquisitions by companies in Asia Pacific amounted to $340 billion in 2004, up from $217 billion in 2003, according to data compiled by Bloomberg.
“This year, we expect to see more merger and acquisition activities across the board,'' said Kevin Tham, ABN Amro Holding's head of Asia loan distribution in Hong Kong. ``In the past two years, the market here was quiet because Asian companies were still building up cash.''
The brewer is competing with New Zealand's Fonterra Cooperative Group Ltd. to buy Melbourne-based National Foods, whose products include Yoplait yogurt. San Miguel, which is also the largest food maker in the Philippines, plans to use $1.4 billion for the acquisition and $450 million to pay its own debt if lenders require early payment after a successful purchase, which would raise San Miguel's leverage, said bankers involved in the loan.
San Miguel will pay interest on the new loan of 0.9 percentage point more than the three-month London interbank offered rate for the first five months, and Libor plus 1.15 percentage points in the remaining four months, according to the press release. That compares with a 1.55 percentage-point margin on a $300 million, five-year loan agreed on in April.
Libor is the average rate set by 12 banks at 11 a.m. in London, published by the British Bankers' Association. Three- month Libor was set yesterday at 2.73 percent. San Miguel will pay a fee of about 0.05 percent to the arrangers if it aborts the loan, said the bankers.
The purchase would be San Miguel's biggest abroad. Lenovo Group Ltd., China's largest computer maker, said last week it's raising $600 million to help buy the personal-computer business of International Business Machines Corp.
Lenovo, based in Beijing, will pay $650 million in cash and $600 million stock and assume $500 million of debt to acquire the unit of Armonk, New York-based IBM and become the world's third-largest PC-maker.
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