No final PAL-San Miguel deal yet

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Despite rumors that Lucio Tan would finally sell his controlling stake in Philippine Airlines, no deal has been sealed

MANILA, Philippines – Shares of PAL Holdings, the listed parent firm of legacy carrier Philippine Airlines (PAL), were heavily traded on Tuesday, April 3, amid reports that a deal with conglomerate San Miguel Corp. is imminent.

The day ended, however, with no deal finalized. Key personalities from both sides — San Miguel president Ramon Ang and PAL Holdings chair Lucio Tan — were at the Century Park Hotel Manila on Tuesday afternoon but the earlier scheduled deal signing did not push through.  

By then, trading at the Philippine Stock Exchange (PSE) has ended, with trading volume of PAL Holdings shares sizzling to a 6-month high.

Trading volume of PAL Holdings shares reached 3,096,200, its highest level since September 28, when volume stood at 3,488,100.

About P26 million worth of PAL Holdings shares traded hands. Its share price closed at P8.30, up 1.47% from the previous day.

PAL Holdings is a thinly traded parent of PAL. Lucio Tan, the country’s second richest, controls PAL through Trustmark Holdings Corp, which holds a 97% stake in the listed holding firm. PAL Holdings owns 84.67% of PAL.

No deal yet

San Miguel was reported by local and international media to be buying a 45% to 49% stake in PAL Holdings for a reported deal price of $500 million.

A well-placed executive of the Lucio Tan group told Rappler that Tan needed more time to study the potential deal with San Miguel. 

On Tuesday morning, responding to the news reports of its imminent deal with PAL stockholders, San Miguel reiterated to the stock exchange its previous message that there are ongoing talks but no deal has been inked yet.

“Further to our previous disclosures relating to the above-captioned subject, and by way of response to the Exchange, we advise that the Company is in talks with the controlling stockholders of Philippine Airlines (PAL) and Air Philippines Corp (AirPhil [Express] Corp) with respect to the possible investment by the Company in PAL and [AirPhil Express],” it wrote.

“An appropriate disclosure shall be made to the Exchange in the event definitive agreements are concluded by the parties,” it added.

San Miguel has been diversifying away from its core business of food and beverages and into heavy industries, including infrastructure and airports.

San Miguel has announced 25 deals worth a total of at least $4.76 billion since 2006 before today, according to data compiled by Bloomberg.

Analysts cited the synergy between PAL and Petron Corp, the oil retailer and refinery unit of San Miguel. The oil giant sells 4% of its jet fuel product to PAL.   

PAL, Asia’s oldest airline, has been financially bleeding as competition in the local and international airline game heats up. It has also suffered from labor disputes and skyrocketing fuel prices.

Tan had reportedly decided to favor San Miguel’s deal offer instead of that by Manuel V. Pangilinan-led group to acquire the entire company for $700 million.

In 2009, tycoon Lucio Tan sold his stakes in Fortune Tobacco Co, one of his family’s crown jewels. 

Fortune Tobacco inked a deal with multinational cigarette firm Philip Morris, though Tan retained shares in the joint venture. –

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