smb final prospectus primary and secondary offering of common shares

8/13/2019 SMB Final Prospectus Primary and Secondary Offering of Common Shares

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The prospectus is being displayed in the website to make the prospectus accessible tomore investors. The PSE assumes no responsibility for the correctness of any of thestatements made or opinions or reports expressed in the Prospectus. Furthermore, theStock Exchange makes no representation as to the completeness of the Prospectus and

disclaims any liability whatsoever for any loss arising from or in reliance in whole or inpart on the contents of the Prospectus.


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PROSPECTUS April 24, 2008

San Miguel Brewery Inc.

Primary Offer of 77,052,000 Common SharesSecondary Offer of 693,472,000 Common SharesOffer Price of P8.00 per Offer Share

Joint Bookrunners and Joint Lead Managers

Citigroup Global Markets Limited ATR KimEng Capital Partners, Inc.

Co-Lead Manager

DBS Bank Ltd.

Joint Domestic Lead Underwriters

ATR KimEng Capital Partners, Inc. BDO Capital & Investment Corporation

Domestic Participating Underwriter

ING Bank N.V.

Domestic Selling AgentsThe Trading Participants of

the Philippine Stock Exchange, Inc.


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SAN MIGUEL BREWERY INC.40 San Miguel AvenueMandaluyong CityThe PhilippinesTelephone Number: +632 632 3000

This prospectus relates to the offer and sale of 770,524,000 common shares (the Offer Shares), par

value P1.00 per share (the Common Shares), of San Miguel Brewery Inc., a corporation organized

under Philippine law (the Company). The Offer Shares will comprise (i) 77,052,000 Common

Shares to be issued and offered by the Company by way of a primary offer (the Primary Offer, and

such Common Shares, the Primary Offer Shares) as further described below and (ii) 693,472,000

existing Common Shares offered by San Miguel Corporation (SMC) pursuant to a secondary offer

(the Secondary Offer, and such Common Shares, the Secondary Offer Shares). The Company

will not receive any of the proceeds from the sale of the Secondary Offer Shares. The Offer Shares

s ha ll be offered a t P8.00 per Offer Sha re (the Offer Price ). An e stimated total of up to

15,410,478,960 Common Shares shall be outstanding after the Combined Offer (as defined below).

The total proceeds to be raised by the Company and SMC from the sale of the Offer Shares shall be

P6,164.2 million, of which the estimated net proceeds will be approximately P 5,819.5 million.

Of the Offer Shares, 231,157,000 Common Shares (the Domestic Offer Shares) are being offered

in the Philippines (the Domestic Offer). Of the Domestic Offer Shares, 154,105,000 CommonShares are being offered at the Offer Price to all of the trading participants (the PSE Brokers) of

the Philippine Stock Exchange, Inc. (the PSE). An additional 77,052,000 Common Shares will be

offered to Local Small Investors through the Domestic Underwriters or authorized selling agents.

ATR KimEng Capital Partners, Inc. (ATR KimEng) and BDO Capital & Investment Corporation

(BDO) will act as the joint lead underwriters of the Domestic Offer (the Joint Domestic Lead

Underwriters).

539,367,000 of the Offer Shares (the International Offer Shares) are being offered and sold outside

the Philippines and the United States through Citigroup Global Markets Limited, ATR KimEng

Capital Partners, Inc., and DBS Bank Ltd. (collectively, the International Underwriters) in reliance

on Regulation S (the Regulation S) under the United States Securities Act of 1933, as amended

(the U.S. Securities Act). The Domestic Offer and the International Offer are collectively referredto herein as the Combined Offer.

In connection with the Combined Offer, SMC has granted the Joint Stabilizing Agents named herein an

option exercisable in whole or in part within 30 days from the date of listing and when trading of the

Companys Offer Shares commences on the PSE (the Listing Date) to purchase from SMC additional

Common Shares comprising up to 15% of the total number of Offer Shares (the Optional Shares) at

the Offer Price, on the same terms and conditions as the Offer Shares as set forth in this prospectus,

solely to cover over-allotments, if any (the Over-Allotment Option). The Offer Shares may be

reallocated between the International Offer and the Domestic Offer. See Plan of Distribution.

In connection with the Combined Offer, the Joint Stabilizing Agents may effect price stabilization

transactions from time to time for a period that shall not exceed 30 days from and including the

Listing Date. The Joint Stabilizing Agents may purchase Common Shares in the open market only ifthe market price of the Common Shares is below the Offer Price. This may have the effect of

preventing or retarding a decline in the market price of the Common Shares and may also cause the

price of the Common Shares to be higher than the price that otherwise would exist in the open

market in the absence of these transactions. If the Joint Stabilizing Agents commence any of these

transactions, they may discontinue them at any time.

All of the Common Shares issued and to be issued pursuant to the Combined Offer have, or will

have, identical rights and privileges. The Common Shares may be owned by any person or entity

regardless of citizenship or nationality. See Plan of Distribution and Philippine Foreign

Investment, Foreign Ownership and Exchange Controls.

The net proceeds from the Primary Offer, determined by deducting from the gross proceeds the totalissue management, underwriting and selling fees applicable to the Primary Offer (up to 2.4% of the

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gross proceeds of the Combined Offer, inclusive of amounts to be paid to other participating

underwriters and selling agents, where applicable), listing fees, taxes and other related fees and

expenses, will be used for general corporate purposes, including working capital and investments.

See Use of Proceeds.

The allocation of the Offer Shares between the Domestic Offer and the International Offer is subject

to adjustment. The International Underwriters may reallocate the Offer Shares between the Domestic

Offer and the International Offer.

Each holder of a Common Share is entitled to such dividends as may be declared in accordance with

the Companys dividend policy. The Companys Board of Directors has resolved that, upon the

listing of the Companys shares on the PSE, the Companys cash dividend policy will entitle holders

of Common Shares to receive annual cash dividends equivalent to 100% of the prior years recurring

net income, which is net income calculated without respect to extraordinary events that are not

expected to recur, based on the recommendation of the Board of Directors. Such recommendation

will take into consideration factors such as debt service requirements, the implementation of

business plans, operating expenses, budgets, funding for new investments and acquisitions,

appropriate reserves and working capital, among others. Although the cash dividend policy may be

changed by the Companys Board of Directors at any time, the Companys current intention is to pay

holders of its Common Shares annual cash dividends at or above the current payout ratio. See the

section entitled Dividend Policy.

The Companys Board of Directors is authorized to declare dividends. A cash or property dividend

declaration does not require any further approval from the Companys shareholders. A stock

dividend declaration requires the further approval of shareholders holding or representing not less

than two-thirds of the Companys outstanding capital stock. The Corporation Code (as defined

herein) defines the term outstanding capital stock to mean the total shares of stock issued to

subscribers or shareholders, whether or not fully or partially paid (as long as there is a binding

subscription agreement), except treasury shares. Such shareholders approval may be given at a

general or special meeting duly called for such purpose.

No dealer, salesman, or any other person has been authorized to give any information or to make any

repre se ntation not c onta ined in this prospec tus. If given or made, a ny s uc h informa tion or

representation must not be relied upon as having been authorized by the Company or any of the

Underwriters. The distribution of this prospectus and the offer and sale of the Offer Shares and

Optiona l Sha re s may, in c erta in juris dictions , be res tric te d by law. T he C ompa ny a nd the

Underwriters require persons into whose possession this prospectus comes to inform themselves of

and observe all such restrictions. This prospectus does not constitute an offer of any securities, or

any offer to sell, or a solicitation of any offer to buy any of the Companys securities in any

ju ri sdic tion , to or fr om any pe rs on to whom it is un la wf ul to ma ke such offe r in su ch ju ri sdic ti on .

Prior to the Combined Offer, there has been no public market for the Common Shares. Accordingly,

there has been no market price for the Common Shares derived from day-to-day trading.

The information contained in this prospectus relating to the Company, its operations and those of its

affiliates has been supplied by the Company, unless otherwise stated herein. To the best of itsknowledge and belief, the Company (which has taken all reasonable care to ensure that such is the

case) confirms that the information contained in this prospectus relating to it, its operations and

those of its affiliates is correct, and that there is no material misstatement or omission of fact which

would make any statement in this prospectus misleading in any material respect and that the

Company hereby accepts full and sole responsibility for the accuracy of the information contained in

this prospectus with respect to the same. The Joint Domestic Lead Underwriters confirm that they

have exercised the required due diligence in verifying that all material information in this prospectus

is true. The Underwriters assume no liability for any information supplied by the Company in

relation to this prospectus. Unless otherwise indicated, all information in this prospectus is as of the

date of this prospectus. Neither the delivery of this prospectus nor any sale made pursuant to this

prospectus shall, under any circumstances, create any implication that the information contained

herein is correct as of any date subsequent to the date hereof or that there has been no change in theaffairs of the Company since such date.

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In making an investment decision, investors must rely on their own examination of the Company and

the terms of the Combined Offer, including the material risks involved. The Combined Offer is being

made on the basis of this prospectus only.

Market data and certain industry forecasts used throughout this prospectus were obtained from

internal surveys, market research, publicly available information and industry publications. Industry

publications generally state that the information contained therein has been obtained from sources

believed to be reliable, but that the accuracy and completeness of such information is not guaranteed.Similarly, internal surveys, industry forecasts and market research, while believed to be reliable,

have not been independently verified, and neither the Company nor the Underwriters make any

representation as to the accuracy of such information.

In this prospectus, references to U.S. dollars, or US$ are to the currency of the United States of

America. The Company currently maintains its accounts in Philippine pesos, the currency of the

Republic of the Philippines, which is referred to as pesos or P. This prospectus contains

translations of certain amounts into U.S. dollars at specified rates solely for the convenience of the

reader. Unless otherwise indicated, the Philippine Dealing System year-end closing rate as of

December 31, 2007, which was P41.280 to US$1.00, was used in these translations. In addition,

unless otherwise indicated, Philippine peso/U.S. dollar exchange rates referred to in this prospectus

are Philippine Dealing System weighted average rates for the indicated period or on the applicable

date, as relevant. No representation is made that the Philippine peso, U.S. dollar, or other currency

amounts referred to herein could have been or could be converted into Philippine pesos, U.S. dollars,

or any other currency, as the case may be, at this rate, at any particular rate or at all.

This prospectus includes forward-looking statements. The Company has based these forward-looking

statements largely on its current expectations and projections about future events and financial

trends affecting its business. Words including, but not limited to, believes, may, will,

estimates, continues, anticipates, intends, expects and similar words are intended to

identify forward-looking statements. In light of the risks and uncertainties associated with forward-

looking statements, investors should be aware that the forward-looking events and circumstances

discussed in this prospectus might not occur. The Companys actual results could differ substantially

from those anticipated in the Companys forward-looking statements.

An application for listing of the Common Shares (including the Offer Shares and all outstanding

Common Shares not part of the Combined Offer) was approved on March 26, 2008 by the board of

directors of the PSE, subject to the fulfillment of certain listing conditions. The PSE assumes no

responsibility for the correctness of any statements made or opinions expressed in this prospectus.

The PSE makes no representation as to its completeness and expressly disclaims any liability

whatsoever for any loss arising from reliance on the entire or any part of this prospectus. Such

approval for listing is permissive only and does not constitute a recommendation or endorsement of

the Common Shares by the PSE.

Application has been made to the Philippine Securities and Exchange Commission (the Philippine

SEC) to register the Offer Shares under the provisions of the Securities Regulation Code of the

Philippines (Republic Act No. 8799) (the SRC).

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ALL REGISTRATION REQUIREMENTS HAVE BEEN MET AND ALL INFORMATIONCONTAINED HEREIN IS TRUE AND CORRECT.

The Offer Shares are offered subject to receipt and acceptance of any order by the Company and

subject to the Companys right to reject any order in whole or in part. It is expected that the Offer

Shares will be delivered in book-entry form against payment therefor to the Philippine Depository

and Trust Corporation (the PDTC) on or about May 12, 2008.

SAN MIGUEL BREWERY INC.

By: SIGNATURE

Name: Ramon S. Ang

Title: Chairman of the Board and President

REPUBLIC OF THE PHILIPPINES)

C ITY OF MAN DAL UYO NG ) SS .

Before me, a notary public in and for the city named above, personally appeared:

Name Community Tax Certificate No. Date/Place Issued

Ramon S. Ang 11895133 January 15, 2008/

Mandaluyong City

who is personally known to me and to me known to be the same person who presented the foregoing

ins trument a nd s igne d the s ame in my pre se nc e a nd who took a n oath before me a s to s uc h

instrument.

Witness my hand and seal this 24th day of April, 2008.

NOTARY PUBLIC

Doc. No. 335;Page No. 68;

Book No. VIII;

Series of 2008.

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TABLE OF CONTENTS

Page

GLOSSARY OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

SUMMARY FINANCIAL AND OPERATING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SUMMARY OF THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

DETERMINATION OF OFFER PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

MANAGEMENTS DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 41

THE BEER INDUSTRY IN THE PHILIPPINES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

BOARD OF DIRECTORS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

SELLING SHAREHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

DESCRIPTION OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

MATERIAL CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

MARKET PRICE OF AND DIVIDENDS ON THE COMPANYS STOCKAND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

REGULATORY FRAMEWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

GENERAL CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

THE PHILIPPINE STOCK MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

PHILIPPINE INVESTMENT, FOREIGN OWNERSHIP AND EXCHANGE CONTROLS . . . . . . . 122

PHILIPPINE TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

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GLOSSARY OF TERMS

In this prospectus, unless the context otherwise requires, the following terms shall have the

meanings set out below.

ABI . . . . . . . . . . . . . . . . . . . Asia Brewery Inc.

ABV . . . . . . . . . . . . . . . . . . . Alcohol-by-volume, expressed as a percentage.

Adjuncts . . . . . . . . . . . . . . . Supplementary carbohydrate sources, such as sugar and non-malted

grains including rice, corn and tapioca starch, used as raw materials for

beer as a substitute for malted barley.

AIBC . . . . . . . . . . . . . . . . . . Anchor Insurance Brokerage Corporation.

Application . . . . . . . . . . . . . An application to subscribe for Offer Shares pursuant to the Combined

Offer.

Average Selling Price . . . . Average selling prices of products, net of VAT and trade discounts.

Banking Day . . . . . . . . . . . A day other than Saturday or Sunday on which banks are open for

business in Metro Manila, Philippines.

BIR . . . . . . . . . . . . . . . . . . . . The Philippine Bureau of Internal Revenue.

Board of Directors . . . . . . The Board of Directors of the Company.

Broad Popular . . . . . . . . . . In respect of the market for beer, used to describe a market segment,

meaning the middle tier of socio-economic groups.

BSP . . . . . . . . . . . . . . . . . . . Bangko Sentral ng Pilipinas, the central bank of the Philippines.

Canadean . . . . . . . . . . . . . . . Canadean Limited, a leading global beverage research company.

Canadean Report . . . . . . . . The report on the Philippine beer industry prepared by Canadean for

inclusion in this prospectus.

CAGR . . . . . . . . . . . . . . . . . Compound annual growth rate.

CBA . . . . . . . . . . . . . . . . . . . Collective Bargaining Agreement.

CCSS . . . . . . . . . . . . . . . . . . Central Clearing and Settlement System.

CKAG . . . . . . . . . . . . . . . . . SMCs Corporate Key Accounts Group.

Combined Offer . . . . . . . . . The offering for sale of the Offer Shares pursuant to the Domestic

Offer and the International Offer on, and subject to, the terms and

conditions stated herein.

Common Shares . . . . . . . . . The Companys shares of common stock, par value P1.00 per share.

Company . . . . . . . . . . . . . . . San Miguel Brewery Inc.

Corporation Code . . . . . . . Batas Pambansa Blg. 68, otherwise known as The Corporation Code ofthe Philippines.

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DENR . . . . . . . . . . . . . . . . . The Philippine Department of Environment and Natural Resources.

Domestic Offer . . . . . . . . . The offer for sale of the Domestic Offer Shares to be made in the

Philippines by the Company and the Selling Shareholder.

Domestic Offer Period . . . From 9:00 a.m., Manila time, on April 28, 2008 to 11:00 a.m., Manila

time, on May 6, 2008, or such other period as may be agreed between

t he C om pa ny a nd t he U nd er wr it er s, s ub je ct t o a pp ro va l b y t hePhilippine SEC and the PSE.

Domestic Offer Shares . . . 231,157,000 of the Offer Shares being offered by the Company and the

Selling Shareholders pursuant to the Domestic Offer (not including

Optional Shares and further subject to reallocation to International

Offer Shares).

Domestic Receiving

Agent . . . . . . . . . . . . . . . . SMC Stock Transfer Service Corporation.

Domestic Selling

Agent . . . . . . . . . . . . . . . . Trading Participants of the PSE.

Domestic Underwriters . . The Joint Domestic Lead Underwriters and the domestic participating

underwriter, ING Bank N.V.

Domestic Underwriting

Agreement . . . . . . . . . . . Agreement dated as of April 25, 2008 among the Company, SMC and

the Domestic Underwriters.

ECC . . . . . . . . . . . . . . . . . . . Environmental Compliance Certificate.

Economy . . . . . . . . . . . . . . . In respect of the market for beer, used to describe a market segment,meaning the bottom tier of socio-economic groups.

EIS Law . . . . . . . . . . . . . . . The Philippine Environmental Impact Statement System.

Eligible Investors . . . . . . . Any natural person of legal age residing in the Philippines regardless of

nationality, or any corporation, association, partnership, trust account,

f un d o r e nt it y r es id in g i n a nd o rg an iz ed u nd er t he l aw s o f t he

Philippines and/or licensed to do business in the Philippines, regardless

of nationality, subject to the Philippine ownership requirement under

relevant Philippine laws.

Equivalent Case . . . . . . . . . A measure of volume for beer, equal to a 24-bottle case of 320 mlbottles, the standard size for San Miguel Pale Pilsen, equivalent to 7.68

liters.

Excise Taxes . . . . . . . . . . . Taxes levied on beer products based on removals from the plant where

the products are produced.

Food Development

Center . . . . . . . . . . . . . . . An agency of the National Food Authority of the Philippines.

Government . . . . . . . . . . . . The Government of the Republic of the Philippines.

GSMI . . . . . . . . . . . . . . . . . . Ginebra San Miguel, Inc.

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Group . . . . . . . . . . . . . . . . . . SMC and its subsidiaries, including the Company.

Hectoliter or hl . . . . . . . . . 100 liters or 13.02 Equivalent Cases.

High-Alcohol Beer . . . . . . Any beer with ABV of more than 5%.

IFRS . . . . . . . . . . . . . . . . . . . International Financial Reporting Standards.

International Offer . . . . . . The offer for sale of the International Offer Shares outside of the

United States in reliance on Regulation S.

International Offer

Shares . . . . . . . . . . . . . . . 539,367,000 of the Offer Shares being offered for sale pursuant to the

International Offer (not including Optional Shares and further subject

to reallocation from Domestic Offer Shares).

International

Underwriters . . . . . . . . . Citigroup Global Markets Limited, ATR KimEng Capital Partners, Inc.

and DBS Bank Ltd.

IPO . . . . . . . . . . . . . . . . . . . . Initial Public Offering.

Issuer . . . . . . . . . . . . . . . . . . San Miguel Brewery Inc.

Joint Domestic Lead

Underwriters . . . . . . . . . ATR KimEng Capital Partners, Inc. and BDO Capital & Investment

Corporation.

Joint Lea d Manager s . . . . . Citigroup Global Markets Limited and ATR KimEng Capital Partners, Inc.

Joint Stabilizing

Agents . . . . . . . . . . . . . . . Citigroup Global Markets Limited and ATR KimEng Capital Partners, Inc.

Jumbo Certificate . . . . . . . A new warrant or stock certificate covering all the warrants or shares

lodged with the PDTC and issued in the name of the PCD Nominee.

JWM . . . . . . . . . . . . . . . . . . Joe White Maltings Pty. Ltd.

Listing Date . . . . . . . . . . . . The date on which trading of the Offer Shares on the PSE begins,

expected to be on or about May 12, 2008.

Local Small Investors . . . . Subscriber or purchaser of the Domestic Offer Shares who is willing to

subscribe or purchase a minimum board lot or whose subscription or

purchase does not exceed P25,000.00.

Low-Calorie Beer . . . . . . . Any beer with caloric content at least 33% lower than ordinary beer.

Manual . . . . . . . . . . . . . . . . The Companys Manual on Corporate Governance, approved by the

Board of Directors on October 25, 2007, and as amended on April 10,

2008.

MCIT . . . . . . . . . . . . . . . . . . The minimum corporate income tax under the National Internal

Revenue Code of the Philippines, as amended, which is currently fixed

at 2.0%.

Offer Price . . . . . . . . . . . . . P8.00 per Offer Share.

Offer Shares . . . . . . . . . . . . The Domestic Offer Shares and the International Offer Shares.

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Off-premise . . . . . . . . . . . . With respect to beer sales, means sales at grocery stores, convenience

stores, sari sari stores and other outlets other than on-premise outlets.

On-premise . . . . . . . . . . . . . With respect to beer sales, means sales at consumer outlets where

consumers purchase and immediately consume beer, such as bars,

restaurants, hotels, food stalls.

Optional Shares . . . . . . . . . Up to 115,578,000 Common Shares to be sold upon exercise of the

Over-Allotment Option.

Over-Allotment Option . . The option granted by the Selling Shareholder to the Joint Stabilizing

Agents within 30 days from the Listing Date to require the Selling

Shareholder to sell up to 115,578,000 additional Common Shares.

PAB . . . . . . . . . . . . . . . . . . . The Philippine Pollution Adjudication Board.

PAS . . . . . . . . . . . . . . . . . . . Philippine Accounting Standards.

PCD Nominee . . . . . . . . . . PCD Nominee Corporation.

PDTC . . . . . . . . . . . . . . . . . . Philippine Depository and Trust Corp.

Peso or P . . . . . . . . . . . . . . The lawful currency of the Republic of the Philippines.

PFRS . . . . . . . . . . . . . . . . . . Philippine Financial Reporting Standards.

Philippine SEC . . . . . . . . . The Securities and Exchange Commission of the Philippines.

Primary Offer . . . . . . . . . . . 77,052,000 Common Shares to be issued and offered by the Company.

Primary Offer Shares . . . . The Common Shares offered in the Primary Offer.

PSE . . . . . . . . . . . . . . . . . . . The Philippine Stock Exchange, Inc.

PSE Brokers . . . . . . . . . . . . Trading participants of the PSE.

Receiving Bank . . . . . . . . . Bank of Commerce.

Regulation S . . . . . . . . . . . . Regulation S under the U.S. Securities Act.

Sandiganbayan . . . . . . . . . . A special Philippine court vested with jurisdiction over criminal and

civil cases involving graft and corrupt practices and such other offenses

committed by public officers and employees.

San Miguel PackagingGroup . . . . . . . . . . . . . . . . A group comprised of SMPSI, SMYAC, SMYFMC, SMRPC and

Mindanao Corrugated Fibreboards, Inc.

SCCP . . . . . . . . . . . . . . . . . . The Securities Clearing Corporation of the Philippines.

Secondary Offer . . . . . . . . 693,472,000 existing Common Shares offered by SMC.

Secondary Offer

Shares . . . . . . . . . . . . . . . The Common Shares offered in the Secondary Offer.

Selling Shareholder . . . . . SMC.

SFAS . . . . . . . . . . . . . . . . . . Statements of Financial Accounting Standards.

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SMBD . . . . . . . . . . . . . . . . . San Miguel Beer Division, a division of SMC before it was spun off to

create the Company.

SMBI . . . . . . . . . . . . . . . . . . San Miguel Beverages, Inc.

SMC . . . . . . . . . . . . . . . . . . . San Miguel Corporation.

SMCSL . . . . . . . . . . . . . . . . SMC Shipping and Lighterage Corporation.

SMDCI . . . . . . . . . . . . . . . . San Miguel Distribution Company, Inc.

SMIL . . . . . . . . . . . . . . . . . . San Miguel International Limited.

SMITS . . . . . . . . . . . . . . . . . SMITS, Inc.

SMPI . . . . . . . . . . . . . . . . . . San Miguel Properties, Inc.

SMPSI . . . . . . . . . . . . . . . . . San Miguel Packaging Specialists, Inc.

SMPFC . . . . . . . . . . . . . . . . San Miguel Pure Foods Company, Inc.

SMRPC . . . . . . . . . . . . . . . . San Miguel Rengo Packaging Corporation.

SMYAC . . . . . . . . . . . . . . . . San Miguel Yamamura Asia Corporation.

SMYFMC . . . . . . . . . . . . . . San Miguel Yamamura Fuso Molds Corporation.

SRC . . . . . . . . . . . . . . . . . . . Republic Act No. 8799, otherwise known as The Securities Regulation

Code of the Philippines, as amended from time to time, and including

the rules and regulations issued thereunder.

Trading Participants . . . . . Member brokers of the PSE.

Underwriters . . . . . . . . . . . The Domestic Underwriters and the International Underwriters.

Upper Popular . . . . . . . . . . In respect of the market for beer, used to describe a market segment,

meaning the upper tier of socio-economic groups.

U.S. dollars or US$ . . . . . . The lawful currency of the United States of America.

U.S. Securities Act . . . . . . The United States Securities Act of 1933, as amended.

VAT . . . . . . . . . . . . . . . . . . . Value-added tax.

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SUMMARY

The following summary is qualified in its entirety by the more detailed information, including the

Companys examined pro forma financial statements and notes relating thereto, beginning on page

F-1 of this prospectus. For a discussion of certain matters that should be considered in evaluating

an investment in the Offer Shares, see the section of this prospectus entitled Risk Factors.

In ve st or s ar e re co mm en de d to read th is en ti re pr os pe ct us ca re fu ll y.

OVERVIEW OF THE COMPANY

The Company is the largest producer of beer in the Philippines, with a total market share of

approximately 93% in 2006, according to Canadean Limited (Canadean). The Company has five

breweries strategically located across the Philippines and a highly developed distribution system

serving approximately 471,000 retail outlets. The Companys beer brands include all of the top four

brands in the country, namely San Miguel Pale Pilsen, Red Horse, San Mig Lightand Gold Eagle. San

Mi guel Pa le Pi lsen, the Companys flagship brand, has a history of over 117 years. San Miguel beer

was first produced by La Fabrica de Cerveza de San Miguel (San Miguel Brewery), a small brewery

in the Philippines that began its operations in 1890. San Miguel Brewery provided the foundation from

which SMC has grown to become the largest food, beverage and packaging company in the Philippines

today. San Miguel Brewery was renamed San Miguel Corporation (SMC) in 1963.

From a single brewery producing a single product in 1890, SMCs corporate history and business

portfolio have evolved over the years. It entered the soft drinks business in 1922 and became the first

overseas bottler of The Coca-Cola Company in 1927. To meet the needs of its beer and soft drinks

businesses, SMC established a glass packaging plant in Manila in 1938 to supply its own requirements.

SMC has expanded to include other food, beverage and packaging products. It has also grown

geographically from a Philippine-based beer company to become a regional producer in the Asian beer

market. The San Miguel brewery in Hong Kong was founded in 1948 and by the 1970s, San Miguel

beer had established a strong market position in Hong Kong. Building on San Miguel beers leading

positions in the Philippines and Hong Kong, SMC expanded into new markets, including China in

1991, Indonesia in 1992, Vietnam in 1993, and Thailand in 2004. Prior to the creation of the Company,

all of SMCs beer operations were under the San Miguel Beer Division (SMBD), a business unit ofSMC.

On July 24, 2007, the shareholders of SMC approved the transfer of SMCs domestic Philippine beer

business assets to the Company in exchange for additional shares in the Company, a wholly-owned

subsidiary of SMC. The assets transferred to the Company comprise the domestic beer business net

assets as of June 30, 2007, excluding land, brands and income and other taxes payable. The Company

was incorporated on July 26, 2007, and the domestic beer business was spun off from SMC effective

October 1, 2007. The spin-off of SMCs domestic beer business into the Company was intended to

realize the value of SMCs flagship business. Following approval by the shareholders of SMC of the

spin-off of the domestic beer business and the creation of the Company, all plant and equipment used

by SMBD in the domestic beer business were transferred to the Company, while SMC retains

ownership of the brands and land assets used in the domestic beer business. Under the new structure,the Company will pay SMC royalties for the use of brands and other intellectual property rights of

SMC, rentals for the lease of the land assets, fees for shared services and dividends. See Related

Party Transactions.

Strengths

The Company believes that its principal strengths include the following:

Strong and popular brand portfolio supported by high quality products. From a s ingle

product produced in a single brewery in 1890, San Miguel beer has, over 117 years later, grown

into an array of popular beer products catering to the distinct tastes and preferences of beer

drinkers across all segments and markets in the Philippines. San Miguel Pale Pilsen, t heCompanys flagship brand, has been an iconic Philippine brand for most of the 20 th century and

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up to today. After considering the Filipino beer drinkers evolving preferences, other brands and

products have been introduced, and these have been very successful. Today, the Company offers

a portfolio of eight strong and popular brands: Pale Pilsen, Red Horse, San Mig Light, Super

Dr y, Cerv ez a Ne gr a, Sa n Mi g St ro ng Ic e, Go ld Ea gl e and Cali, the countrys only malt-based

non-alcoholic drink. The various products carry distinct attributes that cater to all segments of

the Philippine beer market. The Companys products have been internationally recognized for

quality, including five Monde Selection International gold medal awards in 2007.

Attractive growth prospects. Despite its dominant market position, the Company is well

positioned to capture further volume growth and market share in the Philippine beer industry.

Strong overall industry growth. According to Canadeans most recent forecast, beer sales

volume in the Philippines was forecasted to grow by 5% in 2007. The Company expects

industry volumes to continue to grow, driven in part by the forecast strong GDP growth of

6.3-7.0% for 2008, complemented by relatively low inflation. Given its strong brands and

leading market position, the Company believes it is best placed to capture a very large

portion of the expected overall growth in the industry.

Expansion of Coverage Area. In addition, the Company expects to further increase its

sales by expanding its coverage of areas it currently under-serves. Despite its overall

market dominance, the Company believes there are areas where it holds less than 85%

market share. The Company believes it will be able to grow its sales and share in these

markets through enhanced distribution and promotional strategies.

Increased market share of broader alcoholic beverage segment. Further, the Company

also believes additional sales growth can be achieved by increasing its share of the broader

alcoholic beverage segment. In particular, the Company believes its low cost, high-alcohol

beer, Red Horse, which has enjoyed substantial volume growth in the past few years, will be

able to attract hard liquor consumers and take an increasing share of the overall alcoholic

beverage market from the hard liquor segment.

Strong market position presenting significant barriers to entry. The Company enjoys a

number of advantages that would be difficult for a potential competitor to create, making it

difficult for other companies to successfully compete with it in the Philippine beer market.

These advantages include:

Market leadership and economies of scale. San Miguel Beer products have consistently

dominated the market for beer in the Philippines, the countrys largest alcoholic beverage

segment. Based on the Companys internal data, the Companys products captured a high

market share of 95% in 2007. The countrys top four beer brands are all produced by the

Company. Unlike most other markets for beer, in the Philippines, imported brands account

for only 0.1% of the market, with distribution limited to upscale bars and hotels and

high-end supermarkets. Despite the entry of local competition in 1981 and the introduction

of a few locally brewed versions of foreign brands, the Company has maintained anextremely strong market position. The popular acceptance and widespread availability of

San Miguel Beer products have helped strengthen San Miguel Beers market position over

the years. The Companys size and scale of operations provide significant economies of

scale in production, research and development, distribution, and managerial and marketing

functions over a diversified product portfolio and geographic base. Its size also results in

substantial leverage and significant bargaining power with suppliers and retailers.

Proximity of Production Facilities to Consumer Markets. To ensure product availability

and freshness, as well as to minimize distribution costs, the Company maintains a network

of five local breweries that are strategically located in the three main islands of the

Philippines : L uz on, Vis ayas a nd M inda na o. T he C ompa ny has bre we ries in e ac h of

Valenzuela City, Metro Manila; San Fernando City, Pampanga; Mandaue City, Cebu;Bacolod City, Negros Occidental; and Darong, Sta. Cruz, Davao del Sur, with a total annual

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production capacity of 15.1 million hectoliters. Each of these breweries is equipped with

automated facilities capable of packaging the Companys products in a variety of sizes and

formats, including bottles, cans, and kegs. The strategic location of the Companys

breweries reduces overall risks by having alternative product sources to avert possible

shortages and meet surges in demand in any part of the country. This also assists the

Company in ensuring that the beer is freshly delivered to dealers at an optimal cost. The

archipelagic nature of Philippine geography and the relative difficulty of transporting

products to the countrys substantial rural population make these dispersed production

facilities particularly valuable.

Extensive and Efficient Distribution System Coverage. The Company has a far-reaching

and efficient distribution system, which is based on five strategically located breweries and

effective management of third party service providers and provides the Company with a

competitive advantage. The Companys 49 sales offices, contracted logistics providers and

transportation assets including 271 hauling trucks, 201 routing trucks, 254 pre-sell vans and

392 service pick-ups and its network of 468 dealers across the Philippines enable it to

maintain optimum stock levels in terms of quality and quantity in approximately 471,000

on-premise and off-premise outlets nationwide. The Companys products are delivered from

any one of the Companys five breweries by contract haulers to a sales office or dealer

warehouse within five days of production date or less. The sales office or dealer thendelivers the beer to the wholesaler or retailer promptly afterward, ensuring ample stock and

quality wherever and whenever San Miguel Beer products are needed.

T he C ompa nys returna ble bottle s ys te m helps kee p the price of i ts bee r products

a fforda ble. With the high retrieval rates a chie ve d under the s ys te m, bottle usa ge is

maximized before bottles are replaced. Under this system, the Company is able to achieve a

95% average retrieval rate for its bottles, which substantially reduces its packaging costs.

Cost Leadership. The Company maintains a strong cost leadership position through high

productivity and efficiency, as well as cost control measures, which facilitate pricing

fle xibili ty a nd gre ater profit growth by maintaining the C ompa nys margins . T he

Companys product quality initiatives, process enhancements, and improvement programsfor plant operations and facilities management are all expected to be sustained. The

C ompa ny c ontinuously imple me nts proce ss optimiz ation e fforts a nd tec hnology

enhancements to generate cost savings.

Experienced management and production team. T he C ompa ny has a n e xtensive pool of

experienced managers, with many senior managers having been with the Company for an

average of 19 years. The management team is well accustomed to the Philippine operating

environment, and has been able to effectively manage the Company through periods of crisis and

instability in the Philippines. The Company also has established experts in its production

process, including 30 brewmasters, each of whom has completed advanced training and has over

ten years of on-the-job-training experience working for the Company.

Strategies

The Companys principal strategy is to increase the volume of its beer sales, both by increasing its

market share and by increasing the size of the market, while maintaining its margins. It plans to

achieve this through the following:

Increase market share. Although the Company already has a very strong position in the

Philippine beer market, it intends to increase its market share by pursuing targeted marketing

efforts in the regions and localities in which it believes its market share is lower than it is for

the Philippines as a whole, such as in specific areas in North and South Luzon, as well as in

Visayas and Mindanao. The Company intends to accomplish this by selecting specific products

in appropriate packaging to match competing products and brands. The Company also intends toincrease its product visibility in these markets through tactical consumer promotions and

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improve outlet penetration through persuasive selling and trade incentives. Similarly, the

Company intends to increase its share of the overall market for alcoholic beverages. This effort

will focus on those specific regions and localities in which hard liquor sales are higher, and,

similar to the efforts to increase market share in the beer segment, will include package specific

marketing campaigns, persuasive selling and incentives for retailers.

Increase the overall market for beer. The Company also plans to increase its sales volume by

increasing the total market for beer sales. The Companys primary strategies to achieve this

include:

Segmented pricing strategy. The Company intends to keep its products affordable for the

middle and lower socio-economic sectors by maintaining a moderate pricing strategy for its

products in the Broad Popular and Economy markets, where sales are highly price elastic.

For the more upscale, or Upper Popular, market, where sales are less price elastic, the

Company plans to increase the pricing of its existing and new specialty brands, supported

by image-building activities to strengthen their premium positioning and improve their

profitability. For all of its products, the Company intends to manage and align the timing

and magnitude of product price increases with increases in taxes on beer and cost increases,

as well as with economic growth in the Philippines. The Company intends to pursue this

strategy to protect its gains and to sustain the general uptrend for the industry as evidencedby the Companys improved market share and increased level of sales in 2007.

Increase the size of the Upper Popular segment. The Upper Popular market for beer in

the Philippines is a relatively small segment, but it plays an important role in brand-

building and overall market development. The segment offers promising prospects,

underpinned by rising consumer incomes, increasing consumer sophistication, rapidly

changing drinker habits and preferences, as well as increasing urbanization. The Company

intends to further develop the high-priced segment of the beer industry by offering higher-

priced and higher-margin products catering to this segment. With this strategy, the

Company aims to take advantage of opportunities in segmenting the market as well as

pre -e mpting the inc ursion of foreign bra nds. R elative to other Asian c ountries , the

Philippine beer market offers greater potential with regard to premium pricing of brandsgiven the current relatively narrow price gap between the Broad Popular and Upper Popular

brands. Seasonal brews will be explored as one avenue of growth, targeting specific

s egme nts of the marke t a t a particula r t ime or s ea son of the yea r. T his will not only

contribute to growth and consumer interest, but will also serve as a tool to tap new customer

types and determine promising variants and packaging for further brand development.

Strengthen the Brand Portfolio. The Company intends to strengthen its brand portfolio to

take advantage of segment-specific growth opportunities, increasing sophistication and

changing lifestyles of Philippine consumers and to maintain its market leadership position.

The Company plans to maintain the status of its flagship San Miguel Pale Pilsen brand and

strengthen its value through an integrated approach of national brand-building campaigns

and retail promotional and marketing efforts. Recent examples of brand-building activities

include new advertising campaigns for the brand using famous endorsers such as MannyPacquiao, Erik Morales and Kris Aquino under the Walang Katulad (Beer like no other)

and Face to Face campaigns and the recent TV commercial featuring actor Jet Li, which

forms part of the regional campaign to uplift the image and positioning of the San Miguel

Pale Pilsen brand in the Asian region.

The Company intends to implement new programs and initiatives catering to the younger

s egme nt of the marke t to prote ct i ts c ore c us tome rs a nd s trengthe n the a ppea l a nd

preference for the brand among new drinkers. The Company expects to maintain the strong

growth of its Red Horse, San Mig Light, and Gold Eagle brands through the introduction of

new thematic campaigns, special events and volume-generating programs aligned with the

respective positioning of these brands in the market. For the Companys specialty brands,

including Cerveza Negra, Super Dry, a n d S a n Mig S tr on g Ice, the C ompa ny pla ns onincreasing its efforts in on-premise channels by matching these brands with appropriate

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on-premise outlets and through event sponsorships, party series and tie-ups with other

companies. Specialty brands will also be promoted in off-premise channels through

increased visibility and promotions.

Optimize Trade Coverage and Efficiencies. The Company intends to further expand its

trade reach and increase the visibility and availability of its products in retail outlets

through point-of-sale merchandising materials and signage for both on- and off-premiseoutlets to increase sales and outlet yield. In pursuing this strategy, the Company will focus

on improving the efficiency of its trade operations, including trade penetration levels and

adherence to suggested retail prices in all distribution channels by strengthening per-outlet

management, intensifying route assisting activity and alternative distribution mode

management such as pedicabs (bicycle-driven cabs) and tricycles, which help to deliver the

Companys products to remote areas. The Company also intends to raise its frequency of

calls to retail outlets. Management of the distributors territories will be strengthened

through intensified retail-based servicing and territorial reconfiguration.

I nc re as e Sales T hr ough Spe cial E ve nts and by F oc us ing on F as t-gr ow ing T rade

Channels. T he C ompa ny intends to c ontinue i ts volume-ge ne ra ting initiatives a nd

occ as ion-crea tion programs. E xa mple s of the se a ctivit ie s inc lude the C ompa nys

sponsorship of town fiestas and major events, such as San Miguel Beer Oktoberfest, thataim to make the beer drinking experience more relevant and closer to the consumers. The

Company recognizes the importance of fast-growing modern trade channels such as large

supermarket chains, hypermarkets and modern convenience stores in marketing and carrying

its products to consumers, especially in urban areas. Accordingly the Company, primarily

through SMCs Corporate Key Accounts Group (CKAG), is focusing on sales and

marketing programs for key upscale products to these fast growing segments of the market.

New Product and Package Introduction. The Company plans to introduce new products

and new package formats. The Company believes this strategy can increase consumer

interest and overall market size, as well as address the needs of an increasingly fragmenting

market, especially in high growth segments. For example, to increase consumer interest, in

May 2007, the Company introduced San Miguel Pale Pilsen in paper label bottles and hassold beer products in plastic bottles for special seasonal promotions. The Company intends

to continue to pursue packaging innovations and capitalize on the market trend towards

convenience packaging. The Company is developing packaging improvements for existing

brands as well as convenience pack formats consistent with faster-paced lifestyles and

addressing the various activities and interest of consumers.

RISKS OF INVESTING

Before making an investment decision, investors should carefully consider the risks associated with

an investment in the Common Shares. These risks include:

risks relating to the Company and its business, including:

The Companys business and prospects may be adversely affected by changes in consumers

preferences or purchasing power.

The Companys financial condition and results of operations may be adversely affected by

any disruptions in the supply of, or the price fluctuations for, its major raw materials.

Demand for the Companys products is highly price elastic, and if the Company increases

its prices, sales volumes may fall, potentially negatively affecting the Companys financial

results and results of operations.

The Company may not be successful in implementing its strategy to increase its salesvolume.

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Competition in the Companys businesses and markets may cause the Company to lose

market share or reduce its operating margins, which could adversely affect its results of

operations and financial condition.

The Companys reputation depends on trademarks and proprietary rights that it has licensed

from SMC , a nd infringement of the se rights c ould a dverse ly a ffec t the C ompa nys

competitive position; reputational issues involving other entities entitled to use the brands

and trademarks used by the Company could also adversely affect the Company.

The Companys controlling shareholder may take actions that may conflict with its public

shareholders best interests.

T he C ompa ny is s ubstantially depende nt on i ts relations hip with SMC a nd on i ts

relationship with other third parties.

The Companys business and sales are affected by seasonality.

An ongoing dispute regarding the ownership of certain shares in SMC could directly affect

the current control and management policies of the parent.

The Company depends on certain key personnel, and its business and growth prospects may

be disrupted if their services were lost.

Under certain circumstances, the Company may not be able to meet increased demand for its

products and may have to incur significant additional capital expenditures to avoid capacity

constraints.

Consolidation of sales channels in the Philippines may adversely affect the Companys

financial condition and results of operations.

Product liability claims or other circumstances could harm the integrity and customersupport for the Companys brands and adversely affect the sales of its products.

Sales of the Companys products may be adversely affected by its relationship with its

distributors.

Regulatory decisions and changes in the legal and regulatory environment in which the

Company operates could limit its business activities or increase its operating costs.

Increases in excise tax rates applicable to beer or increases in other taxes to which the

Company is subject may reduce consumption of the Companys products or the Companys

margins or reduce both.

Philippine environmental laws and regulations create potential liabilities for the Company

for non-compliance with prescribed environmental standards and limits.

The Company may be adversely affected by any change in environmental, employee health

and safety and other laws and regulations.

Outbreaks of disease, including avian influenza, could adversely affect the Companys

financial condition and results of operations.

risks relating to the Philippines, including:

Political or social instability in the Philippines could have a negative effect on the financialresults and business of the Company.

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The Companys business and sales may be negatively affected by slow growth rates and

economic instability in the Philippines.

If foreign exchange controls were to be imposed, the Companys ability to purchase raw

materials, primarily malted barley and technically advanced equipment, could be adversely

affected.

The occurrence of natural catastrophes or blackouts may materially disrupt the Companys

operations.

risks relating to the Offering, including:

If an active trading market for the Companys Common Shares does not develop, the price

of the Companys Common Shares may suffer and decline below the initial public offering

price.

The price of the Common Shares may be affected if additional Common Shares are sold by

the Companys substantial shareholder or are issued by the Company.

There may be a delay or failure in trading of the Common Shares.

risks relating to certain statistical information in this prospectus:

Certain statistics in this Prospectus relating to the Philippines, the industries and markets in

which the Companys businesses operate have not been independently verified and may not be

accurate, complete, up-to-date or consistent with other information compiled within or outside

the Philippines.

Please refer to the section of this prospectus entitled Risk Factors, which, while not intended to be

an exhaustive enumeration of all risks, must be considered in connection with a purchase of the

Offer Shares.

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SUMMARY FINANCIAL AND OPERATING INFORMATION

The following tables present summary financial information for the Company and should be read in

conjunction with the independent reports, the Companys examined pro forma financial statements

and notes thereto contained in this prospectus and the section entitled Managements Discussion

and Analysis of Financial Condition and Results of Operations.

The Company was created as a spin-off of the domestic beer business of SMC, which was effective as

of October 1, 2007. In the Companys examined pro forma financial statements, the Companys

results are presented as if this spin-off had been completed as of the beginning of the periods

pr es en te d. Th e ex am in ed pr o fo rm a fi na nc ia l st at em en ts in cl ud ed in th is pr os pe ct us ar e fo r

informational purposes only and do not purport to present what the financial position, financial

pe rf or ma nc e an d ca sh fl ow s of th e Co mp an y wo ul d ha ve be en ha d th e sp in -o ff ac tu al ly oc cu rr ed on

Ja nu ar y 1, 20 04 or pu rp or t to pr oj ec t th e fi na nc ia l po si ti on , fi na nc ia l pe rf or ma nc e an d ca sh fl ow s of

the Company for any future period. The examined pro forma financial statements included in this

pr os pe ct us ar e ba se d on th e hi st or ic al fi na nc ia l in fo rm at io n of th e Co mp an y, as sh ow n in th e

audited financial statements as of and for the period from July 26, 2007 to December 31, 2007 and

the audited carve-out special purpose statements as of and for the nine-month periods ended

September 30, 2007 and 2006 and as of and for the years ended December 31, 2006, 2005 and 2004,

after giving effect to the assumptions and adjustments described in the following paragraph.

The examined pro forma financial statements assume that (i) SMC charged the Company a shared

services fee (professional and technical fee for services rendered by SMC to the Company), a rental

fe e fo r th e us e of la nd ow ne d by SM C, an d a ro ya lt y fe e fo r th e us e of th e br an ds an d ot he r

intellectual property rights owned by SMC; (ii) that total number of shares outstanding had been

15,881,866,112 from January 1, 2004 through December 31, 2006, and 15,333,426,960 in 2007. The

decrease of 548,439,152 shares in the number of shares outstanding as of December 31, 2007

represents: (A) the difference of Q573,449,152 between the value of SMBDs net assets as of

De ce mb er 31 , 20 03 (Q15,881,866,112) and as of June 30, 2007 (Q15,308,416,960), minus (B) the

pa ym en t of Q25,000,000 by SMC for its subscription of 25% of the Companys capital stock, and

minus (C) the payment of Q10,000 for the 10,000 shares subscribed for and paid by independent

directors; (iii) the Company declared all of its unappropriated earnings at the end of each year toSMC as cash dividends; and (iv) the Companys net assets balance as of December 31, 2003 is the

beginning capital stock on January 1, 2004.

The examined pro forma financial statements should be read in conjunction with the audited

fi na nc ia l st at em en ts an d au di te d ca rv e- ou t sp ec ia l pu rp os e st at em en ts of th e Co mp an y an d th e no te s

thereto included elsewhere in this prospectus, as well as other information contained in this

pr os pe ct us . Th e Co mp an ys ex am in ed pr o fo rm a fi na nc ia l st at em en ts , th e au di te d fi na nc ia l

statements and the audited carve-out special purpose statements prepared in compliance with PFRS,

were examined and audited, as the case may be, by Manabat Sanagustin & Co., and are included

elsewhere in this prospectus. The summary financial information presented below as of and for the

ye ar s en de d Dece mb er 31 , 20 07 , 20 06 an d 20 05 we re de ri ve d fr om th e Co mp an y s ex am in ed pr o

fo rm a fi na nc ia l st at em en ts . Ex ce pt as ot he rw is e in di ca te d, al l fi na nc ia l da ta an d di sc us si on s th er eo fin this prospectus are based on the Companys examined pro forma financial statements, and all

descriptions of the Company in this prospectus are made on a basis consistent with the assumptions

made in the examined pro forma financial statements.

The information below is not indicative of the results of future operations. Furthermore, all

translations of peso amounts into U.S. dollars are provided for convenience only.

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As of and for the years

ended December 31,

2005 2006 2007 2007(1)

P P P US$

(in millions, except per share figures or

where otherwise indicated)

Income Statement DataNet Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,978 40,565 44,139 1,069.3Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,808) (20,687) (22,927) (555.4)

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,170 19,878 21,212 513.9Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,072) (5,284) (5,841) (141.5)Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,864) (3,382) (3,098) (75.1)Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,234 11,212 12,273 297.3Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 39 0.9Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.6) (0.2) Other income (charges) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 55 13 0.3

Income before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,455 11,270 12,325 298.6Provision for Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,049) (3,944) (4,310) (104.4)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,406 7,326 8,015 194.2

Earning per share basic(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40 0.46 0.52 0.01Number of shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,882 15,882 15,333

Balance Sheet DataCash and short-term securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 994 978 5,262 127.5Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,935 4,692 3,676 89.1Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,169 3,202 2,447 59.3

Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 469 180 4.4

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,366 9,341 11,565 280.2Plant and equipment (net of accumulated depreciation) . . . . . . . . . . . . . . . 6,017 5,660 5,616 136.0Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,553 5,664 5,427 131.5

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,936 20,665 22,608 547.7

Current liabilitiesInterest bearing liabilitiesTrade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,960 2,402 2,360 57.2

Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,087 2,376 4,912 119.0

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 047 4,778 7,272 176.2

Unearned Income 3 0.1Obligation under finance lease net of current portion 7 5

Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5 3 0.1

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,054 4,783 7,275 176.2

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,882 15,882 15,333 371.4

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,936 20,665 22,608 547.7

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As of and for the years

ended December 31,

2005 2006 2007 2007(1)

P P P US$

(in millions, except per share figures or

where otherwise indicated)

Cash Flow DataNet cash provided by (used for):

Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,111 8,547 11,775 285.3

Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,707) (1,237) (1,784) (43.2)

Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,406) (7,326) (5,707) (138.3)

Net increase/(decrease) in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) (16) 4,284 103.8

Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . 996 994 978 23.7

Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . 994 978 5,262 127.5

Other Financial and Operating data

EBITDA(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,846 12,833 13,925 337.3EBIT(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,234 11,212 12,273 297.3

Capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507 316 706 17.1

Gross profit margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.3% 49.0% 48.1%

EBITDA margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.5% 31.6% 31.6%

EBIT margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.5% 27.6% 27.8%

Volume (Equivalent Cases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171.58 155.66 167.51

Volume (Hectoliters) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.18 11.96 12.87

Average selling price/case (in pesos) . . . . . . . . . . . . . . . . . . . . . . . . . . . 238.26 258.92 260.23 6.3

Average selling price/ Hectoliter (in pesos) . . . . . . . . . . . . . . . . . . . . . . 3,102 3,371 3,388 82.1

Not e:

(1) For the readers convenience, certain amounts in pesos were converted to U.S. dollars using the BSP Rate of P41.280 to

US$1.00 as of December 31, 2007.

(2) Computed as net income divided by the weighted average number of Common Shares issued and outstanding each period.

(3) EBITDA and EBIT are measures used by the Companys management to internally evaluate the performance of its

business. EBITDA is calculated as operating income plus depreciation, amortization and impairment losses and EBIT is

calculated as operating income. Neither EBITDA nor EBIT is a measure determined in accordance with PFRS or IFRS,

and should not be considered as an alternative to net income as a measure of operating performance or to cash flow as a

measure of liquidity. The items of net income excluded from EBITDA are significant components in understanding and

assessing the Companys financial performance. Neither EBITDA nor EBIT is intended to be a measure of free cash flow

for managements discretionary use, as it does not reflect certain cash requirements such as interest payments, tax

payments and capital expenditures. The Companys calculation of EBITDA and EBIT may be different from the

calculation used by other companies and, as a result, the Companys EBITDA and EBIT may not be comparable to other

similarly titled measures of other companies.

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SUMMARY OF THE OFFER

Issuer . . . . . . . . . . . . . . . . . . San Miguel Brewery Inc., a corporation organized under the laws of the

Republic of the Philippines.

Selling Shareholder . . . . . SMC.

The Offer . . . . . . . . . . . . . . The Offer Shares consist of 77,052,000 new Common Shares to be

issued and offered by the Issuer and 693,472,000 existing Common

Shares offered by the Selling Shareholder. 539,367,000 of the Offer

Shares are being offered and sold outside the Philippines and the

United States in reliance on Regulation S under the U.S. Securities Act

and 231,157,000 of the Offer Shares are being offered and sold at the

Offer Price to all of the PSE Brokers and to Local Small Investors,

respectively, as part of the Domestic Offer in the Philippines. ATR

K im En g C ap it al P ar tn er s, I nc . a nd B DO C ap it al & I nv es tm en t

C orpora tion will a ct a s the J oint Domes tic L ea d Underwriters.

Domestic Offer Shares not taken up by the PSE Brokers and LocalS ma ll I nv es to rs w il l b e p ur ch as ed b y t he J oi nt D om es ti c L ea d

Underwriters and sold to their clients or the general public prior to the

close of the Domestic Offer.

Offer Price . . . . . . . . . . . . . P8.00 per Offer Share.

Domestic Offer Period . . . The Domestic Offer Period shall commence at 9:00 a.m., Manila time,

on April 28, 2008 and end at 11:00 a.m., Manila time, on May 6, 2008.

The Company and the Joint Domestic Lead Underwriters reserve the

right to e xtend or termina te the Domes tic Offer Period with the

approval of the Philippine SEC and the PSE.

Applications from the PSE Brokers and Local Small Investors must be

received by the Domestic Receiving Agent not later than 11:00 a.m.,

Manila time, on May 5, 2008, whether filed through a Domestic Selling

Agent or filed directly with a Domestic Underwriter. Applications

received thereafter or without the required documents will be rejected.

Applications shall be considered irrevocable upon submission to the

Domestic Selling Agent or Domestic Underwriter, and shall be subject

to the terms and conditions of the offer as stated in this prospectus and

in the Applica tion. T he a ctua l purchas e of the Offer Sha re s s ha ll

become effective only upon the actual listing of the Offer Shares on the

PSE and upon the obligations of the Domestic Underwriters under theDomestic Underwriting Agreement becoming unconditional and not

being suspended, terminated or cancelled on or before the Listing Date

in accordance with the provisions of such agreement.

Transfer Restrictions . . . . The Offer Shares are being offered and sold outside the United States

in reliance on Regulation S. The Offer Shares have not been and will

not be registered under the U.S. Securities Act and, subject to certain

exceptions, may not be offered or sold within the United States. See

Plan of Distribution The International Offer.

Use of Proceeds . . . . . . . . . See Use of Proceeds for details of how the total net proceeds fromthe Offer will be applied.

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Lock-up . . . . . . . . . . . . . . . . The Company and SMC have each agreed with the International

Underwriters that, other than in connection with the Over-Allotment

Option, for a period of 180 days after the Listing Date, neither it nor

any person acting on its behalf will, without the prior written consent

of the International Underwriters issue, offer, sell, contract to sell,

ple dge or otherwise dis pose of (or publicly a nnounc e a ny s uc h

issuance, offer, sale or disposal of) any Common Shares or securities

convertible or exchangeable into or exercisable for Common Shares or

warrants or other rights to purchase Common Shares or any security or

financial product whose value is determined directly or indirectly by

reference to the price of the underlying securities, including equity

swaps, forward sales and options.

Existing shareholders who own an equivalent of at least 10% of the

issued and outstanding Common Shares of the Company after the Offer

are required under the revised listing rules of the PSE applicable to

companies applying for listing on the PSE First Board, not to sell,

assign or otherwise dispose of their Common Shares for a minimum

period of 180 days after the Listing Date. SMC is covered by this

lock-up requirement. This lock-up does not apply to the OptionalShares.

Except for the issuance of Offer Shares pursuant to the Combined Offer

or Common Shares for distribution by way of stock dividends, the PSE

will require the Company, as a condition to the listing of the Common

Shares, not to issue new shares in its capital or grant any rights to or

issue any securities convertible into or exchangeable for, or otherwise

carrying rights to acquire or subscribe to, any shares in its capital or

enter into any arrangement or agreement whereby any new shares or

any such securities may be issued for a period of 180 days after the

Listing Date.

Listing and Trading . . . . . Application was made to the PSE on November 5, 2007 to list thePrima ry Offer Sha re s being iss ue d a nd s old by the C ompa ny, the

Secondary Offer Shares to be sold by the Selling Shareholder, and the

remaining issued and outstanding Common Shares of the Company. See

Description of Securities. All of the Offer Shares are expected to be

listed on the PSE on May 12, 2008. Trading is expected to commence

on the same date.

Dividends . . . . . . . . . . . . . . The Companys Board of Directors has resolved that, upon listing of

the Companys shares on the PSE, the cash dividend policy of the

Company will entitle holders of the Common Shares to receive annual

cash dividends equivalent to 100% of the prior years recurring net

income, which is net income calculated without respect to extraordinary

events that are not expected to recur, based on the recommendation oft he B oa rd o f D ir ec to rs . S uc h r ec om me nd at io n w il l t ak e i nt o

consideration factors such as the implementation of business plans,

debt service requirements, operating expenses, budgets, funding for

new investments, appropriate reserves and working capital, among

others. The cash dividend policy may be changed by the Companys

Board of Directors at any time, and investors should not give undue

weight to this current policy in deciding to purchase the Offer Shares.

On February 4, 2008, the Companys Board of Directors approved the

payment of cash dividends of P2.3 billion, or P0.15 per share. On

April 10, 2008, the Companys Board of Directors declared a cash

dividend of P2.453 billion, or P0.16 per s ha re , in res pe ct of the

Companys net income in respect of the first quarter of 2008, whichwas paid in full on April 18, 2008.

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Tax Considerations . . . . . . See Philippine Taxation for further information on the tax consequences

of the purchase, ownership and disposition of the Offer Shares.

Expected Timetable . . . . . The timetable of the Offer is expected to be as follows (dates provided

below are dates in the Philippines):

Pricing and allocation of theI nt er nat io nal Of fer S har es . . . . . . . . . . April 24, 2008

St ar t o f D ome st ic Of fe r P er io d . . . . . . April 28, 2008

End of Domestic Offer Period . . . . . . . May 6, 2008

For PSE Brokers . . . . . . . . . . . . . . . 11:00 a.m. on May 5, 2008

For Local Small Investors . . . . . . . 11:00 a.m. on May 5, 2008

For Domestic Underwriters . . . . . . 11:00 a.m. on May 6, 2008

S et tl em ent D at e . . . . . . . . . . . . . . . . . . . . May 12, 2008

Listing Date and commencement of

trading on the PSE . . . . . . . . . . . . . . . . . May 12, 2008

The dates included above are subject to market and other conditions

and may be changed.

Risk Factors . . . . . . . . . . . . Prospective investors should carefully consider the risks connected

with an investment in the Offer Shares, certain of which are discussed

in the section titled Risk Factors.

Reallocation . . . . . . . . . . . . The allocation of the Offer Shares between the Domestic Offer and the

Interna tional Offer is s ubje ct to a djus tment. T he Interna tional

Underwriters may reallocate the Offer Shares between the Domestic

Offer and the International Offer.

Over-Allotment Option . . SMC has granted the Joint Stabilizing Agents an option, exercisable in

whole or in part to purchase from SMC up to 15% of the Offer Shares

at the Offer Price, on the same terms and conditions as the Offer Shares

as set forth in this prospectus, solely to cover over-allotment, if any.

The Over-Allotment Option is exercisable within 30 days from the

L is ting Date. See Plan of Dis tribution T he Ove r-Allotment

Option.

Procedure for

Application . . . . . . . . . . . Application forms to purchase Offer Shares in the Domestic Offer may

be obtained from any Domestic Underwriter or Domestic Selling Agent

listed in this prospectus. All Applications shall be evidenced by the

a pplica tion to purchas e form, duly e xe cute d in e ac h c as e by a n

a uthorize d s igna tory of the a pplica nt a nd a cc ompa nied by one

c ompleted s igna ture c ard which, for c orpora te a nd ins ti tutional

applicants, should be authenticated by the corporate secretary, and the

corresponding payment for the Offer Shares covered by the Application

and all other required documents. The duly executed Application and

required documents should be submitted during the Domestic Offer

Period to the same office where it was obtained.

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If the applicant is a corporation, partnership, or trust account, the

Application must be accompanied by the following documents:

A c er ti fi ed t rue co py o f t he ap pl ica nt s l at es t a rt icl es o f

incorporation and by-laws and other constitutive documents (each

as amended to date) duly certified by its corporate secretary or an

authorized officer;

A certified true copy of the applicants Philippine SEC certificate

of regis tration duly c ertified by i ts c orpora te s ec re ta ry or a n

authorized officer; and

A duly notarized corporate secretarys certificate or certificate of

an authorized officer setting forth the resolution of the applicants

Board of Directors or equivalent body authorizing the purchase of

the Offer Shares indicated in the Application, identifying the

designated signatories authorized for the purpose, including his or

her specimen signature.

Foreign corporate and institutional applicants who qualify as Eligible

Investors (as defined in the Glossary of Terms of this prospectus), ina ddition to the doc uments l is te d a bove , a re require d to s ubmit in

quadruplicate, a representation and warranty stating that their purchase

of the Offer Shares to which their Application relates will not violate

the laws of their jurisdictions of incorporation or organization, and that

they are allowed, under such laws, to acquire, purchase and hold the

Offer Shares.

Payment Terms . . . . . . . . . The Offer Shares in the Domestic Offer must be paid for in full upon

submission of the Application. Payments may be made in cash or by a

managers corporate or personal check drawn against a bank account

with a Bangko Sentral ng Pilipinasaut

smb final prospectus primary and secondary offering of common shares

Documents