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San Miguel to buy Ayala food unit

MANILA, Philippines -- The Philippines' biggest food and beverage conglomerate, San Miguel Corp, plans to buy Pure Foods from the Ayala group for up to $190 million.

San Miguel has a $900 million war chest from its earlier divestment of stakes in Coca-Cola Beverages plc and Nestle Philippines. Last month it agreed to buy back part of Coca-Cola Bottlers Philippines from Australia's Coca-Cola Amatil.

Pure Foods is the market leader in meat processing, and has interests in livestock, animal feeds, flour and fast foods including the Burger King franchise.

"The company confirms it has agreed with Ayala Corp on the indicative terms for the acquisition of Pure Foods. Talks are continuing and the parties have not yet signed a memorandum of understanding," a San Miguel disclosure to the stock exchange said.

Both parties have yet to get board approval on the terms of the deal, which is valued at between $145 million and $190 million (7 to9 billion pesos), according to local newspaper reports.

A San Miguel source told Reuters the two parties are still talking about what businesses of Pure Foods will be included in the deal.

Burger King franchise may be included

The source said smaller businesses like the Burger King franchise and some other properties worth several hundred million pesos were still being reviewed for possible exclusion.

"We're still in a negotiation stage, clearly there are some things that we've raised, we have not gotten into an agreement yet," said another San Miguel official who declined to be named.

"It's moving, we are several steps ahead compared to where we were about a month ago. But I cannot say this is something really done and can be disclosed," Rufino Luis Manotok, managing director for planning of Ayala Corp, told Reuters, referring to the negotiations.

Asked if the Ayala group will be selling all of its interests in Pure Foods, Manotok said: "We have 93 percent of Pure Foods and...if we agree on the terms, yes, we will be selling all."

Ayala is selling Pure Foods to focus on its three core businesses: telecommunications, property and banking.

The Ayala group earlier said it was talking to several parties for its stake in Pure Foods. "There are several serious parties...they have really expressed their interest to pursue this except San Miguel came first...they know the business because they are also in the food business," Manotok said.

"Plus the fact I think they have a more special motivation to pursue this because they are flush with cash and it makes sense for them, with the operating synergies."

Reuters contributed to this report.



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