Petron extends footprint in Malaysia with Esso takeover

MANILA, Philippines [UPDATED] – Petron Corp.’s international arm completed a takeover of Esso Malaysia Bhd (EMB) on April 2, strengthening the company’s presence in Malaysia.

In a disclosure to the Philippine Stock Exchange, the Philippines’ biggest oil refiner and retailer said its unit Petron Oil & Gas International Sdn Bhd acquired 65% of EMB for $195 million, roughly P8.4 billion.

Petron triggered a mandatory tender offer with its acquisition of 65% of the voting shares of EMB or 175,500,000 EMB shares last year.

“The tender offer marks Petron’s entry into the highly-attractive and dynamic Malaysian market and is a strategic opportunity for the Company to increase its presence in Asia,” said the company in a March 19 disclosure.

Petron president Eric Recto said EMB currently has over 500 stations in Malaysia, which 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.

Recto, who is also a member of the board of San Miguel Corp, the parent firm of Petron, added that San Miguel believes the oil business in Malaysia holds potential.

Recto said that availability of funding for the offer is not a problem, since they have already received a number of offers from financial institutions in Malaysia and internationally.

“Malaysian banks will be more adept at providing financing for Malaysian opportunities. Filipino banks will not be as competitive in providing ringgit financing,” he explained

He said Petron is currently considering a number of financing structures.

In addition to EMB, Petron is taking over 100% of ExxonMobil Malaysia Sdn Bhd, and 100% of ExxonMobil Borneo Sdn Bhd, with the 3 all together coming to $577.3 million or about P24.84 billion.

Recto explained that they hope to create a supply synergy between Petron and EMB. Petron’s reginery in Bataan with 180,000 barrels a day has nearly 2x the capacity of EMB’s Malaysia refinery which has a capacity of 88,000 barrels per day. 

But Business Mirror clarified in March that even though Petron has the capacity to refine more barrels of oil a day, Petron would not be serving the Malaysian market as much as each subsidiary would continue to serve its own respective country. – Rappler.com