San Mig looks at Manila defence
Philippine brewing giant San Miguel Corp may turn to the government for help in fighting off a hostile takeover bid by the First Pacific Group. San Miguel could resort to the 'national patrimony strategy' used by a local businessman to nullify the sale of the Manila Hotel to Malaysia's Renong group, San Miguel sources said yesterday.
The Supreme Court earlier this year cancelled the sale on the argument that the hotel was part of the national patrimony and should not be owned by foreigners.
Two San Miguel executives confirmed they are 'considering' this option.
San Miguel spokesman Mon Santiago said only 'we will seek expert advice' on the matter.
San Miguel's barricade-building comes despite a lack of firm evidence that Hong Kong-based First Pacific is preparing a takeover bid and scepticism by financial analysts such a bid would be successful.
Rumours of the purported takeover have circulated in Manila's stock exchange for several weeks, leading San Miguel to make an announcement last Friday.
San Miguel senior vice-president and assistant corporate secretary Emmanuel Javelosa said: 'There is reasonable ground to believe that the First Pacific Group is in the process of trying to acquire a substantial block of SMC shares.' The statement said San Miguel was seeking advice on how to 'protect the interests of the stockholders and the corporation'.
The rumours intensified last month when an unidentified buyer purchased 50 million San Miguel shares, or a 2 per cent stake, at a cost of about US$71.5 million.
This led Filipino newspapers to claim the shares were bought by a unit of First Pacific.
First Pacific spokesman Bob Sherbin said the company's policy was not to comment on the rumours.
He said: 'The rumours are certainly persistent. If we do have something to say we will say it in an orderly, transparent way.' Analysts said they doubted whether it was in First Pacific's best interests to pursue such a takeover, considering its heavy debt burden and the fact its regional subsidiaries were suffering in the regional economic turmoil.
Salomon Smith Barney investment analyst Anil Daswani said: 'It would seriously stretch their funding and I don't think it would be their best strategic direction.' He said the recent sale of First Pacific's Hong Kong mobile-phone arm, Pacific Link, would not provide much of a war-chest as the bulk of the $4.84 billion was urgently needed to pay short-term debts.
He said First Pacific was also likely to need extra funds to shore up subsidiaries, such as Berli Jucker in Thailand, that have been hard-hit by the summer's financial woes.
Bear Stearns vice-president Scott Benesch said First Pacific would find it expensive to raise funds in the current environment of regional financial turmoil and would face a bitter fight to gain control of San Miguel in any case.
He said: 'It would be a very expensive venture for them to take a run at the company.
'There could be a bidding war and they would not have the balance sheet to support them.'