Thursday August 18, 2011
San Miguel to buy 65% Esso stake
By JEEVA ARULAMPALAM
PETALING JAYA: Philippine-based conglomerate San Miguel Corp plans to buy a 65% stake in Esso Malaysia Bhd from ExxonMobil International Holdings Inc and fully acquire two other local ExxonMobil subsidiaries for a total price of US$610mil (RM1.82bil), Esso Malaysia said in a notice to Bursa Malaysia.
San Miguel entered into a sale and purchase agreement (SPA) with ExxonMobil International yesterday to acquire 175.5 million Esso shares, representing a 65% stake for US$206.02mil (RM614.25mil) cash, or RM3.50 per share.
Concurrently, San Miguel also entered into two other SPAs with Mobil International Petroleum Corp to fully acquire ExxonMobil Malaysia Sdn Bhd and ExxonMobil Interna-tional to fully purchase ExxonMobil Borneo Sdn Bhd for US403.98mil (RM1.20bil).
The proposed acquisitions were expected to provide San Miguel with a unique opportunity to extend its portfolio of oil refining and marketing businesses outside the Philippines, San Miguel's adviser Maybank Investment Bank Bhd said in press notice issued to Esso Malaysia. Esso Malaysia made public the notice in a Bursa Malaysia filing yesterday.
“San Miguel envisions considerable potential and benefit in upgrading the existing refinery operations of Esso Malaysia to value-added product segments weighted to better margins. With 560 retail stations in Malaysia, the companies to be acquired are also expected to continue to deliver steady earnings in a stable but growing market,” the notice said.
San Miguel, in the last few years, has diversified its core portfolio of food, beverage and packing by expanding its participation in industries such as petroleum, power generation and distribution, mining and infrastructure. Its 68%-owned subsidiary, Petron Corp, is the largest integrated oil refining and marketing company in the Philippines, with crude distillation capacity of 180,000 barrels per day and over 1,700 service stations across the archipelago.
According to its website, the company was established in 1890 as a single-product brewery. Today, its flagship product, San Miguel Beer, holds over 95% market share of the Philippine beer market.
Meanwhile, Maybank Investment said the initial purchase consideration under the SPAs might be adjusted downwards following any dividends paid or capital repayment effected from Jan 1 this year to completion and/or upwards following any capital contribution made from Jan 1 this year to completion.
Once the Esso Malaysia acquisition is completed, San Miguel will be required to extend a mandatory takeover offer (MTO) to buy all remaining voting shares of Esso Malaysia not already owned by it at the ringgit equivalent of the final Esso Malaysia price for cash.
However, San Miguel has determined that the offer price under the proposed MTO shall be the ringgit equivalent of the initial Esso Malaysia price using the prevailing exchange rate as at the date the SPAs become unconditional, and after adjusting either downwards following any distributions effected from the date of the Esso Malaysia SPA to the unconditional date or upwards following any contributions made from the date of the Esso Malaysia SPA to the unconditional date.
Esso Malaysia's share price, which closed at RM4.95 yesterday, hit a 14-year high of RM5.84 in June this year. The company's share price increased 81% year-to-date, partly owing to market speculation that ExxonMobil International was looking to sell Esso Malaysia.
It has been long rumoured that Boustead Holdings Bhd and its parent company, Lembaga Tabung Angkatan Tentera (LTAT), were eyeing ExxonMobil International's 65% controlling stake in Esso Malaysia to grow Boustead's gas station business. In 2005, Boustead bought over 70% of the retail business of British Petroleum (BP) for US$120mil (RM358mil). The remaining 30% is owned by LTAT.
For the six months ended June 30, Esso Malaysia saw its net profit increased 19% to RM156.64mil from RM131.72mil a year ago while revenue was up 33% to RM5.67bil from RM4.26bil previously.