Battle of press releases
WHAT many originally thought was a blockbuster investment agreement that could reshape the country’s media landscape turned out to be a flop.
In June 2014, San Miguel Corp. president Ramon Ang entered into an agreement, in his personal capacity, with the major stockholders of GMA Network Inc. to acquire an initial 30-percent stake in the company.
The buy-in costs approximately P15.3 billion, computed at P10.60 per share. While the payment terms were being finalized, Ang reportedly made an escrow payment of P1 billion.
The investment was warmly welcomed by the Kapuso network. GMA said Ang’s entry would enable it to go up to the next level of competition in the media industry.
Unfortunately, things did not turn out the way Ang and GMA thought they would.
Last June 23, almost one year to the day the deal was made public, GMA announced that discussions on the share purchase had been terminated.
According to GMA, on March 26, 2015, Ang walked away and informed it that “he is no longer proceeding with the transaction on grounds of alleged material changes on the company which are not valid and not borne by the facts and recent financial reports of the company.”
Despite the walkout, however, Ang allegedly proposed new terms and conditions which GMA rejected.
Termination
Ang, however, said GMA’s announcement came as a surprise. He said the termination came while they were still in the middle of negotiations, and that GMA gave its comments on the unresolved issues without saying it was no longer interested in pursuing the transaction.
What came next was an exchange of press releases between the parties on the events that led to the cancellation of the buy-in. Each one blamed the other for the breakdown.
The war of words became a “he said, she said” affair, as the parties gave conflicting versions of the incident.
The smiles and complementary remarks the parties exchanged shortly after the proposed investment was made public were replaced by biting words and sarcastic remarks, even hints of possible lawsuits.
The erstwhile friends became bitter enemies. Although coached in subtle terms, they practically accused each other of dealing in bad faith in the discussions on the terms and conditions of the share purchase agreement.
Since no details about the points of disagreement have been released, the public is left in the dark about the circumstances that brought about the acrimonious parting of ways by the parties.
The “marriage” that could have forced the country’s major radio and TV companies—ABS-CBN Broadcasting Corp. and ABC 5 —to revise their business plans was over before it even started.
Recriminations
If the contending parties are not who or what they are, their dispute would not have drawn the attention of the business community.
It is not unusual for proposed mergers or acquisitions to go bust after the buying or investing party finishes its “due diligence review” of the books of the target company. Some skeletons in the closet may have been discovered.
Nor does it raise eyebrows if the target company refuse to sell its shares or go back on its earlier acceptance of a buy-in offer when it finds the payment terms unsatisfactory.
In mergers and acquisitions, the parties try to negotiate the best terms possible for themselves and, when things don’t meet their expectations or the desired benefits cannot be achieved, call it quits.
When that happens, they are expected to quietly unbundle the preliminary agreements they may have earlier entered into, return all confidential documents given during the negotiations, and part ways amicably.
It is considered in bad taste, nay, taboo, to bad mouth or reveal confidential information to assuage hurt pride.
Burning bridges could result to long-term adverse consequences. Who knows, sometime in the future, the parties’ paths may cross once more and, by force of circumstances, be obliged to do business with each other again.
Reputations
Ang and Felipe Gozon, the CEO of GMA, are two of the most respected business leaders in the country.
Their managerial expertise and business foresight have brought their companies to the high levels of profitability and prominence they now enjoy. The business community takes note of their comments on social and economic issues.
Until the negotiations on Ang’s buy-in into GMA broke down, they have conducted themselves in a manner that befits their stature in the country.
Thus, it is disappointing to read that these pillars of the business community have brought their disagreement over the abortive GMA buy-in into the open. Figuratively, they washed their dirty linen in public.
Seasoned and astute businessmen as they are, they could have silently ended their negotiations and moved on without further ado or inviting media attention.
The sharp exchange of words through press releases should have been avoided. The combative statements the parties threw against each other were uncalled for.
Their actuations sent the wrong message to young entrepreneurs and business executives who look up to them as gentlemen-managers worthy of emulation for their professional competence.
Businesspersons can compete with each other aggressively without being disagreeable or losing their equanimity.
Although the contending parties have piped down on their rhetorics, we probably have not heard the last on this issue. Hopefully, the next round would not require “Parental Guidance” when it is reported by the broadsheets.
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