Petron not giving up on Esso Malaysia takeover bid

Rappler.com

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Petron wants to hold another tender offer to buy all shares of the Malaysian oil refiner after some public shareholders rejected the first one

NEW ACQUISITION. Petron takes over Esso Malaysia. Shown here tanker trucks leaving the giant oil Esso refinery in southern France. File photo by AFP

MANILA, Philippines – Petron Corp. wants to fully take over a Malaysian oil refiner by offering to buy out its remaining public shareholders for the second time.

Petron, through its international arm Petron Oil and Gas International Sdn, Bhd, has beefed up its stake in Esso Malaysia Bhd to 73.32% from 65% after a recent tender offer to minority shareholders.

Petron chairman and CEO Ramon Ang told reporters they hoped to own 100% of Esso, but not all shareholders accepted their offer.

“When you do a tender offer, you wish you can buy everybody. But unfortunately from our previous 65%, after the first round of offer, we were only able to buy around 8%,” he said on the sidelines of Petron’s annual shareholders’ meeting on Tuesday, May 15.

Ang said they plan to conduct another offer following requests from public shareholders who were not able to participate in the first one. “We will check again with the Malaysian bourse and their SEC (Securities and Exchange Commission) to make another round of tender if it’s necessary.”

In August last year, San Miguel Corp., which owns and operates Petron, bought control of Esso and its downstream oil units, in a bid to expand into the regional oil and gas sector. This triggered a mandatory tender offer, where minority shareholders were given the chance to exit the company by selling their shares at the same price as the original deal. 

Future growth

However, minority shareholders of Esso were told not to accept Petron’s takeover offer as it was “not fair.”

The shareholders’ advisor, Kenanga Investment Bank, told them in a circular prior to the tender, “We opine that the offer is not fair to the holders and the holders who reject the offer will stand to benefit from the potential future growth of the company under the new management and ownership.”

Esso’s operations in Malaysia have a processing capacity of 88,000 barrels of crude per day (bpd). The company has over 500 retail stations, putting it second to Malaysia’s largest oil player, Petronas.

Petron president Eric Recto said they intend to grow Esso as they did Petron, and take advantage of the synergy between the two.

“We are a smaller player in Malaysia, but we intend to be a strong, secondary player in that market. We think we will continue to grow from a consumption standpoint,” he said. 

“Three years ago, when we took over Petron and we’ve seen how successful we have been in turning the company around and we want to do the same in Malaysia.”

Petron is the largest oil retailer in the Philippines with over 1,700 stations across the country. It owns a 180,00 barrels per day refinery in Bataan province.

“We’re now going to be a bigger purchaser of crude. When we’re buying crude for two refineries, we will probably enjoy synergy in that respect,” said Recto.

Petron and Esso are part of San Miguel’s diversified asset portfolio, which it built in the last five years. San Miguel has been moving away from its traditional food and brewing businesses and into heavy and risky areas such as infrastructure, telecommunications, power and energy.

More acquisitions

Ang said Petron’s net income is estimated to reach P10 billion this year, versus P8.5 billion last year, especially if the downtrend in world oil prices stabilizes at $100 per barrel.

“The problem with Petron is when world oil prices are going down and you have a lot of inventory, you will incur losses. If world oil prices are stable then the results should be better in the next three quarters,” he said.

Ang also said that they have started consolidating Esso’s operations with Petron and expect these to be reflected on the latter’s financial results in the second half of the year.

On expansion in the region, he said, “We are very interested. If there are opportunities to acquire more in the region, then we will. I cannot be specific as competition is very tight.” – Rappler.com

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