Bells toll for SMC’s Meralco venture? the Staff Philippine Daily Inquirer
June 16, 2009
THE stock market is speculating that it’s only a matter of time before MVP’s (Manuel V. Pangilinan) group gains control of Meralco--that is of course by buying out San Miguel Corp.’s 27-percent stake in the utility. The market also expects that a deal would be possible given a premium that is hefty enough (of course, that’s where Meralco’s share price is headed nowadays)—and that other shareholders would realize some windfall from a tender offer.
Forward-looking analysts are now busy guessing where else San Miguel will invest in, if and when it unloads its stake in Meralco in favor of its “friendly competitor.”
The two groups, which are the most active in the Philippine merger and acquisition (M&A) arena, have almost the same strategy and are looking at almost similar sectors. Second-tier stocks which have been buoyant over the previous weeks, are potential candidates, analysts said. Doris C. Dumlao
Soliciting Philex proxies
Aside from gobbling up shares from the open market, First Pacific Co. Ltd. of Hong Kong has been actively soliciting proxies of Philex Mining ahead of the regular annual stockholders meeting later this month. (The deadline to accumulate proxies was moved to June 22.)
Industry sources said the group of Manuel V. Pangilinan is forging alliances with institutional investors for the long haul, as it wants the country’s largest mining company to be its vehicle for the mining industry.
But if the Social Security System will stay on as a substantial strategic investor in Philex, market pundits say MVP may have no other choice but to woo the state-owned pension fund too.
Of course, given the public spat between MVP and SSS Administrator Romulo Neri last year—the former having barred the latter from sitting on the PLDT board and the latter retaliating by creating a ruckus at Philex—this would be one very interesting show. Doris C. Dumlao
Forcing the horse to drink
Presidents of some of the largest banks in the country were surprised to receive an unusual and rare invitation from Malacañang last week to attend President Arroyo Cabinet meetings.
According to our sources, the meeting was arranged by Trade Secretary Peter Favila, and was meant to convince banks to loosen their purse strings and lend money to the Arroyo administration for its much-ballyhooed, Obama-style stimulus package.
Clearly, the administration is growing increasingly worried that—over a year into the greatest economic crisis of recent times—major stimulus infrastructure projects have yet to get off the ground (even as the crisis may already be winding down in developed economies).
During the meeting, some bank presidents supposedly exchanged knowing glances among themselves, silently asking one another, “You mean they don’t have the money for these things?”
Well, with the Bureau of Internal Revenue’s collection efforts flagging, no thanks to the weak economy, it seems the government is finding itself a little short in cash to deliver on its promises (having even to restart foreign borrowing of late).
Of course, one does not say “no” outright to the President so the bank chiefs nodded and made supportive noises.
Upon leaving the Palace, though, it seemed that a few of them were convinced to lend more aggressively, even if interest rates are already approaching rock-bottom.
This reminds us of that old adage often used often to describe banks that are hesitant to lend money: “You can lead a horse to water, but you cannot force it to drink.” Daxim L. Lucas
Bragging rights
Speaking of interest rates, the benchmark used by the Bangko Sentral ng Pilipinas to control the cost of borrowings across the economy stands just a hair’s breadth away from the 4.125-percent record low last touched in 1992.
Having presided over several rate cuts since the outbreak of the economic crisis, BSP Governor Amando Tetangco Jr. now stands just half a notch away from claiming for himself the bragging rights of having the lowest interest rate regime in Philippine history.
Of course, financial markets are willing to grant the BSP chief this small measure of vanity, but very few—including Tetangco—seem to expect rates to stay this low for very long.
Thus, expect banks to hold bank on aggressive lending, since they don’t want to be tied down to low interest rates. Daxim L. Lucas
