Esso up on Petron entry

Shares rise 8 sen after San Miguel unit unveils investment plan
PETALING JAYA: Esso Malaysia Bhd
rose eight sen to RM3.64 after Petron, a unit of San Miguel, said on
Wednesday that it would invest in the downstream assets of ExxonMobil in
Malaysia.
Esso Malaysia's shares touched an intra-day high of
RM3.72, far higher than the RM3.50 per share price San Miguel is paying
ExxonMobil for its 65% stake in Esso Malaysia. (ExxonMobil is selling
this stake in Esso Malaysia along with other unlisted downstream petrol
retailing assets to San Miguel for a total of US$610mil.)
But
while the statement by Petron does indicate San Miguel's proposed
acquisition of ExxonMobil's Malaysian downstream assets is going ahead,
some analysts have questioned the basis for this statement.
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“It
is puzzling why Petron made that disclosure, which merely stated that
it will invest in ExxonMobil's downstream assets and with nothing
finalised on the structure. This is puzzling as San Miguel controls
Petron and by now, things should have been firmed up, considering it's
been many months since San Miguel put in the bid for the Malaysian
assets,” said the analyst.
Petron's disclosure to the Philippine
Stock Exchange on Wednesday merely stated that its executive committee
had approved the investment but that the amount and percentage sharing
had yet to be determined.
An industry observer said the timing of
Petron's statement coincides with San Miguel's other deal with a
Malaysian party and wondered if there is any link. Yesterday, CIMB Group Holdings Bhd group chief executive Datuk Seri Nazir Razak said he hoped to conclude negotiations with San Miguel Corp on the acquisition of a stake in Philippines' Bank of Commerce within the current quarter.
“The
timing seems interesting. Petron is coming out to say that it will be
investing in Malaysia at about the same time that CIMB is close to
securing the Bank of Commerce deal,” the observer pointed out.
It should be noted that recent media reports had also quoted Boustead Holdings Bhd deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin
as saying that he was still “open to discussions” if the opportunity
did arise for the group to acquire ExxonMobil's Malaysian assets.
It
has also been reported that Boustead was one of the parties that had
put in a bid to buy the Malaysian downstream assets of ExxonMobil.
Soon
after the announcement by ExxonMobil that it was divesting its assets
to San Miguel, certain quarters has sounded alarm bells on the sale,
saying that it wouldn't be suitable for a beer company to own petrol
stations in Malaysia due to the cultural sensitivities in the country.
“Another
reason for Petron's statement on the Exxon acquisition is that San
Miguel may want to use the Petron name more strongly in the deal and
avoid the difficulties that they would face if the San Miguel brand came
out strong in Malaysia,” said one industry player.
San Miguel
owns 68% of Petron while Esso Malaysia's businesses include about 560
service stations and equity interest in 10 fuels distribution terminals
(seven are active) and a refinery in Port Dickson.