By Jenniffer B. Austria

JAPAN?S second largest brewer, Kirin Holdings Co., is negotiating to buy 43.25 percent of San Miguel Corp.?s beer operations.

The deal could be worth P59 billion based on San Miguel Brewery Inc.?s closing price of P8.80 a share at the end of trading yesterday.

?Kirin will enter into an exclusive negotiation with San Miguel to acquire 43.25 of issued and outstanding capital stock of San Miguel Brewery,? San Miguel said in a disclosure to the Stock Exchange.

?The details of the transactions are to be further disclosed by both parties.?

Both parties aim to sign definitive agreements by the end of February.

San Miguel holds 14.52-billion shares equivalent to a 94.24-percent stake in San Miguel Brewery.

The remaining 5.75 percent is owned by the public after the food and beverage conglomerate placed the share in the domestic brewing business for sale in an initial public offering last year.

If the deal is closed, Kirin would be required to conduct a tender offer for the remaining San Miguel Brewery shares.

Analysts said the sale of San Miguel?s shares in its beer unit was aimed at raising funds to finance its diversification.

San Miguel is venturing into telecommunications, power, mining and oil refinery.

The conglomerate earlier acquired 27 percent of power distributor Manila Electric Co. for P30 billion.

The group also bared plans to venture into the telecommunications industry in a joint venture with Qatar Telecom.

Most recently, San Miguel reported it had entered into an option agreement to acquire a majority interest in oil giant Petron Corp. The deal could reach P32 billion.

Kirin now holds a 19.9-percent stake in San Miguel.

Kirin also acquired San Miguel?s Australian dairy and juice manufacturer, National Foods, for $2.6 billion in 2007.

During the first nine months of 2008, San Miguel Brewery reported a net income of P7 billion, an amount 22.8 percent higher than last year?s. The growth was bolstered by an estimated 6-percent growth in volumes.

Sales revenues of P35.2 billion were 10 percent higher than in the same period in 2007.