The Philippines food and beverage company, San Miguel Corp., has confirmed that it is considering buying back a 27% stake in the company which has been the subject of legal wrangling since 1986.

The company said on Thursday that its management was studying the buyback plan. The stake is worth around PHP46 billion (US$870m).

However, analysts have suggested that implementing the buyback will be complicated as ownership of the stake is fiercely disputed, with the government, the country's coconut farmers and a private consortium of coconut producers all claiming ownership.

The government currently holds the voting rights of the 27% interest, having taken over the over the stake from the defunct Coconut Industry Investment Funds. Trade and Industry Secretary, Manuel Roxas, has said the government is looking to sell the stake to raise funds.

"The legal dispute on the ownership may make a buy-back impossible to pull off or not feasible in the near term," said Gilbert Lopez, analyst at ING Baring Securities Philippines. "They could study it, but the fact remains that they cannot buy it until the ownership is settled. And I think there is so much politics at stake for this to be resolved in the near term."

SMC reported that its consolidated net sales rose by 10% in January and February to PHP21.51 billion, on the back of volume gains in its beverage, packaging and food businesses. Operating income was up 24% at PHP1.52 billion for the two months, though analysts said the rise in profits may be attributable to a lower comparative figure in 2002 which was depressed by significant interest charges.