Friday, 14 May 2010

San Miguel eyeing energy firm to complement its oil business; deal worth $2B

By Doris Dumlao, Amy R. Remo
Philippine Daily Inquirer

SAN MIGUEL CORP. IS finalizing a major deal worth $2 billion to acquire an energy company that will complement the conglomerate’s oil refining business.

San Miguel also plans to sell an additional 14-percent stake in its packaging business to Japanese partner Nihon Yamamura Glass (NYG). That deal may be worth $100 million.

SMC president Ramon Ang on Thursday told reporters at the sidelines of the stockholders meeting of Ginebra San Miguel Inc. that the company would also consolidate its hard liquor and beer brewery line and pare down its stake in other core business like food to boost funds for expansion.

In terms of business mix, Ang said he would like to grow the share of energy and power investments to over 60 percent in the years ahead.

On new acquisitions, Ang said San Miguel was currently looking to acquire at least a 60 percent stake in a “very good” energy company with a “very strong cash flow” and whose business was related to that of Petron.

“We are in the final stage of negotiation,” Ang said, noting that the potential acquisition could be worth at least $2 billion in equity value.

As part of its expansion into heavy industries, San Miguel plans to buy additional shares in oil refiner Petron Corp. to gain majority control. SMC may also bid for upstream oil and gas firm PNOC-Exploration Corp., if the new administration would consider privatizing its controlling stake in the firm.

But PNOC-Exploration Corp. has again asked the government to spare the company from privatization, stressing that its sale without public bidding is illegal and may be tantamount to a “midnight deal.”

The existing board had refused to approve the sale of its 10-percent participating interest for P16 billion because “no public bidding was contemplated.”

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