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NEWS UPDATES Asean Affairs                      18  August 2011

San Miguel makes energy buy

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The Philippines’ biggest food and beverage manufacturer has acquired three Malaysian subsidiaries of a US energy firm.

In a statement, San Miguel Corp. said its board and management signed agreements worth US$610 million for the purchase of ExxonMobil International Holdings Inc.’s 65 percent stake in Esso Malaysia Bhd, as well as for the takeover of its wholly-owned subsidiaries, ExxonMobil Malaysia Sdn Bhd. and Exxon Mobil Borneo Sdn Bhd.

The three subsidiaries form an integrated business engaged in the refining, distribution and marketing of petroleum products.

“Exxon Mobil’s Malaysian downstream business is attractive to San Miguel given that there is plenty of room to move up the value chain by upgrading refinery capabilities,” said Ramon Ang, SMC president and chief operating officer.

The Malaysian firms’ prized physical assets include the Port Dickson refinery, which has a rated capacity of 88,000 barrels a day; seven fuel distribution terminals; and a network of roughly 560 branded service stations, 420 of which are company-owned.

Ang said SMC would upgrade the port so it can make use of a wider variety of crudes and produce higher-value products, underscoring its commitment to invest in the business.

“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 underserved areas in the fuels market,” he said.

In a disclosure to Bursa Malaysia, Esso said SMC acquired 175.50 million ordinary shares at 3.50 ringgit each, representing 65 percent of the voting shares in the company, from ExxonMobil for $206.02 million.

Under the Malaysian Code for Takeovers and Mergers 2010, the Philippine conglomerate is required to undertake a mandatory tender offer to acquire the remaining Esso shares.

Simultaneous with the execution of the share purchase agreement, SMC separately entered into a $403.98-million deal for the acquisition of a 100-percent interest in Exxonmobil Malaysia and Exxonmobil Borneo.

The purchase would boost the oil refining business of SMC, which also owns a majority stake in Petron Corp., the Philippines’ largest oil refiner.

With a crude distillation capacity of 180,000 barrels a day, Petron, among other high-growth subsidiaries, had fueled the strong earnings of SMC in the first half of this year.

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