San Miguel surprised investors yesterday with plans for a new corporate shake-up that may see it sell part of its core food unit and more of its flagship beer operations.

"The restructuring may require the divestment of part of our interest in our major subsidiaries through either an IPO or follow-on offering and strategic partnerships with existing partners and other industry leaders," chairman Eduardo Cojuangco told a shareholders' meeting in Manila.

"In the event that we do pursue such a partnership, San Miguel would retain controlling interest of at least 51 percent."

Southeast Asia's largest food and drinks group has yet to win over fund managers to a previous strategic shift, announced last year, that saw it list its domestic beer unit and declare an intention to branch into mining, power and property.

The 118-year old group, in which Japanese brewer Kirin has a 20 percent stake, has yet to make a major acquisition in heavy industry in the Philippines.

San Miguel's A shares, restricted to local investors, have dropped 34 percent and its B stock, open to all, have slid 42 percent since the new strategy was unveiled in May 2007.

The Philippines' main index lost 24 percent in that period.

"Fellow stockholders, it may seem that far too much is fluid," said Cojuangco, who has a 17 percent stake in the company.

"One year on, we are still on the lookout for potential and prospective investments. There are a few companies out there that we are looking at, and we will report to you as soon as something concrete materialises."

Cojuangco said San Miguel was preparing for a secondary offering of its food business and its newly listed beer unit, San Miguel Brewery, and an IPO for its packaging unit.

The company raised just $147 million when it floated 5 percent of San Miguel Brewery, which contributes around 40 percent of group operating profit, in an IPO in May. It had originally hoped to raise around $566 million from the listing, which was hit by market turbulence.

San Miguel Brewery reported a 9 percent increase in first half sales to P23.8 billion.

January-May group net profit trebled to 17 billion pesos, easily beating 2007 full-year net income of 8.63 billion pesos, due to one-off gains.

Hit by rising input costs and a maturing home market, San Miguel went on a sell-off spree last year including unloading Australian dairy and juice producer National Foods to Kirin for $1 billion. - Reuters