No major obstacles seen to Esso stake purchase

by **hlk** Tue 23 Aug 2011, 14:17

KUALA LUMPUR: ExxonMobil's sale of its 65% stake in Esso Malaysia Bhd is conditional upon approvals from the Ministry of International Trade and Industry, the Ministry of Domestic Trade, Cooperative and Consumerism and Securities Commission, according to the offer document.

However, some analysts do not forsee any major obstacles for ExxonMobil securing such approvals to sell its Malaysian assets to San Miguel Corp.

“In cases like these, ExxonMobil would have received the necessary advice on the deal and would have typically got the tacit approval of the relevant authorities before they announced the deal,” explain one investment banker.

An analyst from a local research house said although the offer price by San Miguel for Esso Malaysia was lower than the current traded price, he said “the price had probably been agreed upon much earlier when Esso Malaysia's shares were trading lower.”

He added: “It is already a done deal between a willing buyer and a willing seller and the other shareholders (of Esso Malaysia) will not have any say. They can choose to stay on as shareholders if they don't want to accept the RM3.50 offer.”

Recent news reports, however, had said that Lembaga Tabung Angkatan Tentera (LTAT) was keen to acquire ExxonMobil's assets in Malaysia, including the 65% stake in Esso Malaysia. However, these remain unsubstantiated.

At the time of writing, LTAT had yet to respond to queries on this from StarBiz, including how much they were willing if at all to pay for Esso Malaysia.

Last week, San Miguel announced plans to buy the 65% stake in Esso Malaysia for RM614.25mil or RM3.50 a share. It will also buy all of the unlisted ExxonMobil Malaysia Sdn Bhd (EMMSB) and Exxon Mobil Borneo Sdn Bhd (EMBSB) for a combined RM1.21bil, of which both companies are both involved in the business of marketing petroleum products.

Esso Malaysia has an aging refinery in Port Dickson with a capacity of 88,000 barrels a day, but it only produced 45,000 barrels per day on average last year.