STAKE, $500 M
MANILA, FEBRUARY 28, 2012 (INQUIRER) By: Doris
Dumlao - Most local stocks tumbled sharply on Monday, dragging the main
stock index below 4,800, as investors scrambled to pocket gains after the strong
run-up since the start of the year.
The main-share Philippine Stock Exchange index shed 93.71 points, or 1.9
percent, to close at 4,799.29. The index last week soared to nearly 5,000 but
failed to break out of this key resistance level.
All counters faltered but the sharpest losses were incurred by the holding
firm, industrial and financial sub-indices, which respectively tumbled 3
percent, 2.2 percent and 1.8 percent.
Value turnover amounted to P7.16 billion. There were only 47 advancers, which
were overwhelmed by 118 decliners while 32 stocks were unchanged.
Ma. Theresa Marcial-Javier, senior vice president and head of asset
management and trust group at Bank of the Philippine Islands, said a correction
was healthy for the stock market.
"Our overall view is we are bullish about the economy and the market, and I
am sure many people will be delighted to see corrections like this as it is an
opportunity to add to your position," Marcial-Javier said.
Marcial-Javier said there was still a lot of cash invested in the stock
market and with many investors re-rating the country, she noted that a secular
bull run correction should be healthy.
Aboitiz stocks were among those that succumbed to heavy profit-taking after
last week's run-up that was triggered by a prospective merger-and-acquisition
play on the group's banking unit, Union Bank.
SMC acquisition of PAL 'imminent' 49% stake, management
control for $500M By: Daxim L. Lucas, Paolo Montecillo Philippine
Daily Inquirer 10:31 pm | Friday, February 24th
[PHOTO: SMC's Eduardo M. Cojuangco, Jr.
Chairman and CEO, Chairman
Executive Committee, San Miguel Corporation]
San Miguel Corp.'s (SMC) acquisition of a "significant minority stake" in
flag carrier Philippine Airlines (PAL) is, for all intents and purposes, a done
deal with an official announcement set to be made in the coming days.
Sources from both camps familiar with the negotiations between tycoon Ramon
Ang and the country's second richest man, Lucio Tan, described the deal as
"imminent," adding that only "minor details and final touches" remained to be
ironed out between both businessmen.
The SMC conglomerate is set to acquire a 49-percent stake in PAL for an
estimated $500 million, which will come in the form of an equity infusion,
resulting in a dilution of Tan's stake. SMC will also be given management
control of the airline.
The deal is being likened to Tan's divestment of half his stake in Fortune
Tobacco Corp. to form a joint venture with multinational cigarette maker Philip
Morris International in 2010.
In that transaction, management control of the merged entity was also handed
over to the acquiring party.
PAL—the first airline to offer commercial services in Asia—has also seen its
market share eroded in recent years by the entry of no-frills carriers like Cebu
Pacific of the Gokongwei family.
According to sources, an initial agreement between San Miguel president Ang
and Tan was sealed as early as late last year and would have been concluded last
month were it not for a last-minute expression of interest by telecommunications
tycoon Manuel Pangilinan.
Pangilinan—who also runs Hong Kong-based First Pacific Group of Indonesia's
Salim family—was said to have offered Tan $700 million for a 100-percent stake
in the airline.
The offer was said to have divided Tan's close advisers with the taipan
having decided to favor Ang with the deal only in recent days.
Officials from both camps declined to speak on the record about the
transaction.
Ang said: "We are still in talks with them."
Yesterday, PAL spokesperson Cielo Villaluna confirmed months of speculation
surrounding the nation's oldest carrier.
"Talks are definitely going on," Villaluna told the Inquirer.
She clarified, however, that discussions were at the shareholder level and
that the company as an entity was not directly involved.
She declined to give details, saying that the company would issue public
disclosures at the appropriate time, or once any deal is signed.
Villaluna added that she was not aware if PAL's shareholders were in talks
with other groups aside from SMC.
Earlier this month, PAL's parent company PAL Holdings reported a net loss of
P3.6 billion for the April-to-December period of 2011—the first three quarters
of the airline's current fiscal year. This was a reversal from more than P3
billion in profits a year before.
The losses were caused by high fuel prices and labor issues in late 2011 that
prevented PAL from cashing in on the holiday season last December.
PAL said total expenses rose 12 percent, driven mainly by the higher cost of
jet fuel, which averaged $133 a barrel in 2011 from $98 in 2010.
At the end of 2011, PAL said jet fuel accounted for more than 50 percent of
total expenses, up from 39 percent a year earlier.
Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
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