PETALING JAYA: Philippines-based food and beverage giant San Miguel Corp is acquiring 175.5 million shares or 65% equity interest in Esso Malaysia Bhd from ExxonMobil International Holdings Inc for US$206.02 million (RM614.25 million) or RM3.50 a share.

With this acquisition, San Miguel has triggered a mandatory takeover offer to acquire the remaining 35% of Esso Malaysia it does not already own at RM3.50 as well.

However, on news of San Miguel acquiring the 65% block, Esso Malaysia’s stock rallied and closed at RM4.95 per share, gaining 61 sen, and ending 41.43% higher than the offer price.

Considering Esso Malaysia’s share base of 270 million shares, San Miguel may have to fork out RM330.75 million for the remaining 35% in the company, at RM3.50.

For giant San Miguel, this should not pose any problems, considering the company’s market capitalisation in the Philippines was in excess of US$6 billion at its close yesterday of 125 Philippine pesos.   

According to Esso Malaysia’s annual report for FY10, other than ExxonMobil International there are no other substantial shareholders in the company. The top 30 shareholders control about 72.81% of the company. Esso Malaysia’s net tangible assets is RM3.38 per share.

It was earlier speculated that Esso Malaysia was being taken over by Lembaga Tabung Angkatan Tentera’s vehicle Boustead Holdings Bhd, but it is not known what happened to this deal.     

Other than Esso Malaysia, San Miguel is also looking to acquire Exxonmobil Malaysia Sdn Bhd and Exxonmobil Borneo Sdn Bhd from Mobil International Petroleum Corp (MIPC),and ExxonMobil International, forking out US$404 million in total for the two companies.

The three subsidiaries form an integrated business chain and are engaged in the refining, distribution and marketing of petroleum products with physical assets, including the Port Dickson refinery with a rated capacity of 88,000 barrels per day, seven fuel distribution terminals, and a network of roughly 560 branded service stations, 420 of which are company-owned, according to an announcement on San Miguel’s website.

According to Ramon Ang, San Miguel’s chief operating officer and president, the venture is attractive given that there is plenty of room to move up the value chain by upgrading refinery capabilities.

He added that the conglomerate is committed to investing in the business.

“Our plan would be to upgrade the Port Dickson refinery so it can make use of a wider variety of crudes, and produce higher-value products. This acquisition provides us with a unique opportunity to expand our participation in the regional oil and gas sector, and we will focus our efforts not just on upgrading refinery capabilities, but expanding reach into under-served areas in the fuels market,” said Ang.


This article appeared in The Edge Financial Daily, August 18, 2011.