Synergy the San Miguel way
From a portfolio perspective, San Miguel’s new business ventures increase the company’s exposure to profitable recurring revenue and are highly synergistic with the company’s core businesses, enjoying complementarities in scale, markets, geography, technology and raw materials. At the corporate level, the size and scale of San Miguel’s distribution network operations will provide significant economies of scale and synergies in production, research and development, distribution, management and marketing. Scale also lends to substantial leverage and bargaining power with suppliers and retailers, an advantage that SMC currently enjoys. In terms of immediate distribution channels, Petron’s network of over 1,700 service stations and convenience stores have already broadened the footprint of SMC’s food and beverage products. And the combined distribution network will also be critical in the roll-out of new products and services. SMC’s ownership of toll roads and regional airports would further expand this network, providing various retail and advertising options in kiosks and rest stops. The infrastructure sector would also result in ancillary business opportunities for SMC businesses as its tollway projects provide the right of first refusal to use the land that falls within the scope of the project. Synergies are also abundant for the power business and San Miguel’s three coal mines, with the mines providing raw material input to the power plants and fuel for the company’s other non-coal power plants.