February 2/BusinessWorld -- San Miguel Corp. will sell up to 40% of its food subsidiary to raise more funds for its ambitious diversification strategy, repeating a similar move in its brewery business last year.

The plan also involves selling food brands and other intellectual property to unit San Miguel Pure Foods Company Inc. to raise 3.2 billion Philippine pesos. The food and beverage conglomerate will also sell its 51% stake in San Miguel Pure Foods Investment Ltd. (BVI) to overseas unit San Miguel Pure Foods International Ltd.

The sale of up to 40% in San Miguel Pure Foods will be "by way of a trade sale or a marketed placement to investors, which may include investors outside the U.S. and to not more than 19 non-qualified buyers domestically to be determined by management."

An analyst said the move would allow San Miguel to fast-track diversification plans by focusing on more profitable industries.

"All we can say there is that is in line with their plans to diversify out of slow-growth business to faster-growth industries," April Lee-Tan, head of research of online brokerage CitisecOnline.com, said in a phone interview.

San Miguel Pure Foods will declassify common shares and increase its capital by 1 billion Philippine pesos equivalent to 100 million shares at a 10.00 Philippine peso par value, from the current 5.206 billion Philippine pesos.

The San Miguel board has also approved the "potential issuance of up to 75 million new [San Miguel Pure Foods] shares to San Miguel or third parties." San Miguel said it would have the right to potentially buy up to 5.2 billion Philippine pesos worth of new San Miguel Pure Foods shares.

San Miguel declared a cash dividend yesterday of 0.35 Philippine pesos per share payable on March 8 to all stockholders on record as of February 19.

The conglomerate has diversified into heavy industries like power, infrastructure, oil and telecommunications.

From the February 15, 2010, Prepared Foods E-dition