10:06 PM
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San Miguel Corp. has firmed up a deal to
acquire 49 percent of tycoon Lucio Tan’s PAL Holdings Inc. for about $500
million, thereby obtaining a significant foothold in national flag carrier
Philippine Airlines.
Inquirer sources said SMC and the group of
Lucio Tan agreed in principle for the former to buy into PAL’s parent company
before the SMC’s exclusivity period lapsed in end-March.
An emergency board meeting was convened by
PAL Holdings on Monday afternoon to discuss the deal with SMC, which had been in
the works for the last three months.
The sources said that under the
arrangement, SMC would buy 49 percent of PAL Holdings, a publicly listed entity.
The structure of the deal is described by sources as complex but in the end,
SMC’s entry in PAL’s parent company is seen giving it an effective 40-percent
control of the airline. As expected, SMC will have management control of the
airline.
SMC’s entry as Tan’s strategic partner was
seen helping in the refleeting and modernization of the aircraft of Philippine
Airlines in preparation for the projected heavy influx of tourists in the coming
years, which will be beneficial to the Philippine tourism industry.
The purchase price was in line with PAL
Holdings’ current valuation at the stock market. As of Monday, its shares were
up 0.49 percent at P8.18 a share, giving it a market capitalization of P44.13
billion.
Industry sources said Tan and SMC president
Ramon Ang had been in talks for the latter’s potential investment in PAL,
initially meant as a personal venture for Ang, who is himself a pilot. However,
SMC itself had become interested in the airline, leading to a memorandum of
understanding signed last December that paved the way for a due diligence
audit.
The airline business is seen in line with
SMC’s diversification into infrastructure-building. San Miguel is investing
about $300 million to modernize and set up new tourism amenities at the
Godofredo P. Ramos airport in Caticlan, the main gateway to the world-famous
Boracay Island. The conglomerate has also expressed interest to participate in
the public bidding for the public-private partnership airport contracts.
Ang has been in on-and-off talks to invest
in PAL over the last few years.
Ang’s business rival, First Pacific Co.
Ltd. executive director Manuel V. Pangilinan, likewise expressed interest in PAL
and while an alternative offer was kept as a back-up plan, industry sources said
Tan himself and his brother Harry Tan had favored Ang’s proposal.
PAL earlier got an imprimatur from
Malacañang to spin off its catering, ground handling and call-center
reservations units, making it easier for the airline to attract investors. The
spin-off plan is a measure intended to stabilize PAL’s finances due to the
lingering effects of the global recession.
Posted in: News,Philippine Airlines,SMC
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