Petron offers to buy out minority owners in Esso Malaysia

MANILA, Philippines – Local oil refiner and retailer Petron Corp. has offered to buy the remaining 35% stake of minority shareholders in Esso Malaysia Berhad (EMB), its recently acquired unit in Malaysia.

In a disclosure on Monday, March 19, Petron said that its offshore affiliate, Petron Oil and Gas International Sdn Bhd (Petron International), has served the “notice of mandatory take-over offer” to the board of directors of EMB.

The mandatory take-over offer was triggered when Petron acquired 175,500,000 shares of EMB — representing 65% of the listed Malaysian firm’s voting shares — last August 2011.

Minority shareholders — who hold the remaining 94.5 million shares — have up to March 30 to avail of Petron’s tender offer, which involves a cash offer price of RM3.50 per share.

Petron said the tender offer marks its entry into the highly-attractive and dynamic Malaysian market and is a strategic opportunity for Petron to increase its presence in Asia.
 
Malaysia unit

Diversified conglomerate, San Miguel Corp, which controls Petron, said in a separate disclosure that it acquired the following for $610 million:

• Esso Malaysia Berhad (EMB), a publicly traded company of which Exxon Mobil owns a 65% stake
• wholly-owned ExxonMobil Malaysia SdnBhd (EMMSB)
• Exxon Mobil Borneo SdnBhd (EMBSB)

San Miguel said the 3 subsidiaries form an integrated business engaged in the refining, distribution and marketing of petroleum products.

This Malaysian group has the following physical assets:

• a refinery that has 88,000 barrel-per-day capacity
• 7 fuel distribution terminals
• a network of roughly 560 branded service stations, 420 of which are company-owned

Expansion

Petron president Eric Recto said EMB is second to Malaysia’s largest oil player, Petronas.

“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.  

He added that they want to develop that potential the way we saw the potential in Petron. “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,” he said.

Recto said they are looking at a supply synergy between Petron and Esso.

Petron owns a 180,00 barrels per day refinery in Bataan while the Malaysia refinery has a capacity of 88,000 barrels per day.

“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. It’s not a situation where Petron will be serving the Malaysian market or Exxon Malaysia serving the Philippine market,” Recto said. – Rappler.com