San Miguel and Kirin Forge Strategic Partnership.

Business Editors

MANILA, Philippines--(BUSINESS WIRE)--Dec. 14, 2001

San Miguel Corporation (SMC), the Philippines' largest food and beverage company, announced that Kirin Brewery Co, Ltd., Japan's leading brewer and one of Asia's largest conglomerates, is taking a minority stake in SMC in a bid to strengthen its regional presence in the food and beverage industry.

Kirin will subscribe to 442.6 million newly issued San Miguel B shares, representing approximately 15% of SMC's enlarged capital. Kirin's stake would give the company two representatives on the San Miguel board.

The shares are priced at P63 per share, a 25% premium to San Miguel B shares' last closing price of P50.50. The total transaction is valued at P27.88 billion and is expected to close in March 2002.

San Miguel Chairman and CEO Eduardo Cojuangco Jr. said, "Now that we have considerably fortified our position in the domestic market, SMC must set its sights on establishing a stronger regional presence. This initiative represents a major step forward in strengthening our business interests in the Asia-Pacific. Furthermore, this transaction not only reinforces the company's position, but also benefits the country by sending out a very positive signal to the market that foreign investors have confidence in investing in the Philippines."

The two companies have over 60 million hectoliters of brewing capacity placing this partnership among the top five brewers worldwide.

Koichiro Aramaki, President of Kirin, commented, "We have been impressed with the management team at SMC. SMC has a large-scale influence in Southeast Asia and China. It is a diversified food and beverage company, like Kirin. These are the reasons for this partnership and this investment is a clear signal of the importance of Asia in Kirin's global strategy."

SMC is the Philippines' largest publicly held food, beverage and packaging company. Founded as a single-product brewery in 1890, the Company, together with its subsidiaries, is one of the country's biggest taxpayers and largest private employers with close to 30,000 employees. Its flagship product, San Miguel Beer, owns over 80% of the domestic market.

Currently ranked among the ten largest brewers in terms of volume, Kirin has total assets of US$14 billion, total revenues of US$13.8 billion and a total operating income of US$823 million in fiscal year 2000. Its core businesses are beer, spirits and wines, softdrinks and food. Its other businesses include pharmaceuticals, Agribio and nutrient food and feed.

With the investment by Kirin, the shareholding structure will be proportionally adjusted. However, we would like to note that the issuance of shares to Kirin is almost equivalent to the shares bought back under the approved share repurchase program in 1999 and 2001. Thus, this new issue will have negligible effect on the ownership percentage of existing stockholders before the share buy-back. In relation for example to the CIIF shares, it is less than one percent (1%) dilution.

Furthermore, improved operating performance, landmark acquisitions and this transaction, all result in significant increase in share value. In 1998, the average price per share for "B" stocks was P50.80. In this transaction, which is after the 10% stock dividends issued in 1999 and this year, the value attributed is P63 per share.

Shareholder approval is necessary for issuance of the new shares. A Special Stockholders Meeting is scheduled for 27 February, 2002. Acting as financial adviser for Kirin is Deutsche Bank; Goldman Sachs is advising SMC.

Founded in 1890, San Miguel is the largest food and beverage company listed in S.E. Asia and is active within the brewing and beverages, food and food-related, and packaging areas. San Miguel's ordinary shares trade on the Philippine Stock Exchange and trade in ADR form in the US (each equal to ten SMC Class B common shares). Prices for the ADRs may be accessed on the NASD OTC Bulletin Board under the symbol SMGBY. Quotes for San Miguel ordinary shares may be accessed on Bloomberg under the symbol SMC/B PM and on the Reuter Equities 2000 Service under the symbol SMC.

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