Power-based conglomerate San Miguel Corp. has executed the sale of P13 billion worth of shares in Manila Electric Co. equivalent to a 5.2 percent interest in the power distributor (out of SMC’s 27 percent) to food unit San Miguel Pure Foods Co. About 59 million shares were sold by the parent to the subsidiary at P220 a share versus SMC’s effective acquisition cost of P100 each (including interest from the Government Service Insurance System). PureFoods, however, bought the shares in Meralco at a discount to market price (closing price was P256.80 on Tuesday).
Industry sources said SMC was using the balance sheet of PureFoods (which earlier announced plans to venture into high-yield businesses outside food) to raise money in preparation for a major offshore acquisition. The conglomerate has looked at something in Australia but it seems that it no longer needs to look too far away from the region. And that’s a big hint right there.—Doris C. Dumlao
More DBP ‘spin’
Development Bank of the Philippines (DBP) on Tuesday reported a net income of P1.74 billion in the first half of the year. Hooray! Good, right? It did, after all, achieve what the bank called a “realization rate” of 46.47 percent of its 2011 net income target of P3.7 billion.
But hang on a second. Is the bank trying to spin its way out of a bind once more?
Apparently, a simple Google search is enough to demolish the angle being offered by the new guys running the bank.
During the same period last year, DBP had actually earned a staggering P2.83 billion (this representing a 34-percent increase over the previous year’s figure).
So taking this into account, maybe the correct way to write the news about the government financial institution’s first-half performance would be: “DBP’s first-half income drops 38 percent.”
According to the bank’s official line, the decline can be explained by the deferred provisioning the bank had made toward the end of the year. The bank, they said, had set up provisions to strengthen its balance sheet further.
It also blamed “thinning spreads” and the need to set up more provisioning to further strengthen its balance sheet. Okay.
Another bank insider repeated an alternative view, however: “The performance this year is suffering because everyone here is so focused on internal probes. Morale is low and no one’s doing anything productive.” OK, that sounds plausible.—Daxim L. Lucas
Ad changes
Faced with the prospect of towering competition (“monopolistic” is how they describe it) from a merged PLDT-Digitel entity, Globe Telecom Inc. is shaking up how it does things, big time.
The advertising industry is abuzz with news that the Ayala-controlled telecommunications firms is about to ditch its 15-year relationship with industry giant Universal McCann in the hope of revitalizing its image. True? Well, not completely.
According to a ranking Globe official, the company was merely “reviewing” the “media side” (i.e. the firm in charge of placing out ads) of its advertising business to determine which of the many agencies out there is best suited for its needs.
“The ‘creatives’ business will remain with McCann,” he said.
The deal is a lucrative one, of course, given that Globe has a multibillion-peso advertising budget each year.
And speaking of advertising… has anyone noticed that there seems to be a new advertising war between PLDT-Smart and Globe? The former, especially, has been very aggressive of late, at one time taking out eight full-page ads in a single broadsheet on a single day.
“More importantly, their advertising and product offerings seem to look more and more like ours,” chuckled the Globe official. “We’re not [mad]. We’re flattered.”—Daxim L. Lucas
Hotel casino betting
Something is brewing in Gatchalian-led Waterfront Philippines Inc. as the hotel firm’s share price has risen this month in increasing volume. Somebody is accumulating its shares, leading some stock pundits to think there may be a merger-and-acquisition play. After all, WPI’s share price is trading below book value and its hotels have gaming space. Unlike Resorts World across from NAIA 3, though, it only hosts the casinos operated by the state-owned Philippine Amusement and Gaming Corp.
With the gaming regulator now tightening on requirements for soon-to-be-built privately run casinos, could buying into existing casino-hotels be the next best thing? Could WPI indeed be a hostile takeover target? Two prominent names—both with existing licenses to set up shop in the soon-to-rise entertainment complex Pagcor City along Manila Bay—have been floated as potential “suitors.”
“Unfounded rumors,” however, is how a spokesperson from the Gatchalians described these. “We are not in talks with anybody. No, we’re not selling.”—Doris C. Dumlao
Tektite rebidding
No taker was there when the bidding for the Tektite office property of the Philippine Stock Exchange was closed late Monday (after a second deadline extension). As such, the PSE is now planning a new round of bidding and if this still fails, the PSE will start considering options on negotiated sale for the property in Ortigas Center.
The property has a total floor area of 4,754.72 square meters—put on the auction block for a minimum price of P45,000 a square meter exclusive of value-added tax. It covers three floors and 21 parking slots.
Developer Philippine Realty and Holdings Corp., which donated the property to the local bourse, has the right to match the best offer to be submitted to PSE but has yet to indicate interest to exercise this option.—Doris C. Dumlao
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