San Miguel to buy P32.8 B-worth majority stake in Petron from Ashmore
Reuters | 12/08/2008 3:39 PM
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San Miguel Corp will buy a majority stake in Petron Corp from the Ashmore Group for about P32.8 billion ($675 million) after the British investment company completes a deal with the Philippine government, San Miguel's president said on Monday.
Ashmore is set to increase its stake to more than 90 percent in Petron, the biggest oil refiner in the Philippines, after agreeing on Friday to buy the government's 40 percent holding.
The deal will give San Miguel a foothold in the oil industry and comes more than a month after it bought a 27 percent stake in utility firm Manila Electric Co. for about $607 million as part of a long-standing plan to exit the food and beverage business in favor of heavy industry.
San Miguel President Ramon Ang told Reuters in a text message San Miguel would buy 51 percent of Petron, or about 4.78 billion shares, from Ashmore at P6.85 a share, a premium of nearly 43 percent over Petron's closing price on Monday.
"Yes, done deal," Ang said when asked if San Miguel has struck a deal with Ashmore on Petron.
The purchase would be made at the same price, P6.85, as that agreed by Ashmore and the Philippine government on Friday.
San Miguel later confirmed in a statement it had entered into an option agreement to purchase up to 50.1 percent of Petron.
Eric Recto, Petron president and one of Ashmore's representative to the company, said there was a deal with San Miguel but he declined to give details.
"My understanding is that they have come to some form of conclusion," Recto said, adding he was not directly involved in talks with San Miguel.
Good for Petron
Shares of Petron jumped 10.3 percent to close at P4.8 in light trade on Monday while San Miguel's B shares open to all investors were flat at P41.50 and its A shares restricted to locals were unchanged at P41.
The main stock index gained 1 percent.
"The deal will be good for Petron because it is now out of government hands," said an analyst from a foreign brokerage firm who declined to be identified because of company policy. "Whether it would be good for consumers is another matter."
San Miguel, partly owned by Japanese brewer Kirin Holdings , is cash-rich after selling major food and beverage businesses in the last two years, including Australian dairy and juice firm National Foods which it sold for $2.6 billion in 2007.
San Miguel also told the stock exchange on Monday it would pursue a joint venture with Qatar Telecom to offer wireless broadband and mobile phone services in the Philippines. The Philippines now has a mobile penetration rate of about 75 percent.
Local media reports said last month San Miguel was planning a $2 billion preferred stock offering but the firm said it had yet to decide on the size and terms of its planned capital raising.
On Saturday, Finance Secretary Margarito Teves told Reuters Ashmore had agreed to a deal in which the government would sell its 40 percent stake in Petron for P25.7 billion.
The deal would raise Ashmore's stake in Petron to more than 90 percent and mark the exit of the government from the oil refiner.
Ashmore's purchase price was higher than the deal it forged with Saudi Aramco earlier this year when it bought a 40 percent stake in Petron for $550 million, or 6.531 pesos per share.
Ashmore unit SEA Refinery Holdings BV later raised its Petron stake to more than 50 percent after it bought shares from minority shareholders via a tender offer also at P6.531 a share.
Recto told reporters Petron expects to post a net loss of up to P2 billion this year, its first net loss in at least seven years, due to inventory losses following the sharp drop in world oil prices.
