San Miguel may end up owning majority of Petron
Reuters | 10/29/2008 12:10 PM
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UK investment manager Ashmore Group will exercise its right to raise its stake to 90 percent in oil refiner Petron Corp., but it may turn around and sell a portion to San Miguel, a top Petron official said on Wednesday.
Talks have begun between Ashmore and Southeast Asia's largest food and beverage firm San Miguel Corp., which wants to buy into Petron, but the negotiations are far from finished, Eric Recto, Petron president and an Ashmore representative to the oil firm told Reuters.
"All it is are discussions for now," Recto said, reacting to a local newspaper report that San Miguel has struck a deal with Ashmore.
San Miguel is seeking to buy more than 50 percent of the country's largest oil refiner as it ventures out of its core businesses to fuel stronger profit growth after dominating its home market for food and drinks.
"Yes, we want to invest more than 50 percent," Ang said in a text message to Reuters when asked how much of a stake San Miguel was seeking in Petron.
On Monday, San Miguel signed a deal to buy a 27 percent stake in the country's largest power distributor Manila Electric Co. in a cash deal worth 30 billion pesos ($612 million), with payments spread out over 3 years.
The deal was San Miguel's first major acquisition more than a year after it announced it would invest in heavy industry such as power, mining, utilities and infrastructure. That decision shocked many investors and was criticised by some analysts who said the company did not have the expertise in those sectors.
San Miguel had failed in attempts last year to buy the government's stake in geothermal power producer Energy Development Corp . and the right to operate the country's power grid.
Ashmore, through its unit SEA Refinery Holdings BV set up by Ashmore Investment Management Limited, acquired 40 percent Petron stake of Aramco Overseas Co. for $550 million and more shares from a tender offer.
with its 50.57 percent stake in Petron, Asghmore has the right of first refusal over a 40 percent block the government wants to sell before the year ends.
"It is our right and we intend to exercise it," said Recto.
The government earlier this month pegged the sale of its stake at 6.85 pesos per share, hoping to raise around P25.7 billion ($526 million). But the stake is now valued at just P17.6 billion at current market prices after recent sell offs in the stock market on fears of a sharp global downturn.
Petron shares climbed 3.3 percent in late trade on Wednesday, underperforming the 4.58 percent rise in the main index.
San Miguel's A shares exclusive to locals erased some of its early gains and was up 1.08 percent at 0317 GMT. It was up more than 5 percent in early trade.
San Miguel B, open to all investors, rose 2.2 percent in late trade, lower than gains of nearly 9 percent at open. Both shares were lightly traded.
