First Pacific to acquire 31% stake in Roxas Holdings

Photo from www.roxascompany.com.ph

MANILA, Philippines—The First Pacific Group of Manuel V. Pangilinan has secured a foothold in the Philippine food industry, after agreeing to acquire a 31-percent stake in Roxas Holdings Inc., one of the country’s biggest sugar milling and refining companies.

But the deal does not appear to be a takeover transaction.

The announcement was made by Roxas Holdings in a stock exchange filing yesterday. Roxas and Co. Inc. sold about half of its 66-percent stake in the company to First Pacific Natural Resources Holdings BV for P2.23 billion, or P8 a share.

Roxas Holdings shares have more than doubled in value since the start of the month as rumors of the potential takeover deal spread.

But the rumors were doused when the terms were disclosed yesterday and it was revealed that First Pacific was buying up to 34 percent of Roxas Holdings, just below the 35-percent threshold that would require it to make a buyout offer to shareholders.

Roxas Holdings dropped 6.46 percent to P6.81 a share yesterday.

The gap between the 31-percent First Pacific agreed to buy and the 34 percent it wants, may be accounted for by shares of other stockholders, the filing showed.

Roxas and Co. executive chair Pedro Roxas said the deal would address its long search for a strategic partner. He added that they would continue to hold 35 percent of Roxas Holdings.

“This partnership of [Roxas Holdings] with First Pacific, a leading global player, will strengthen [Roxas Holdings] and prepare it for the industry consolidation that will take place with the advent of the Asean integration in 2015,” President and CEO Renato Valencia said.

First Pacific, which has been seeking to expand its regional food business, owns PT Indofood Sukses Makmur Tbk, one of the biggest food companies in Indonesia. Pangilinan said in a previous interview that the company was also interested in investing in banana and palm oil plantations in the Philippines.

Roxas and Co. plans to use the proceeds from the sale to “realign core shareholders, strengthen its finances, while funding the development of real estate and tourism projects, the filing showed.

Roxas Holdings in 2010 completed the expansion of its sugar milling subsidiaries, Central Azucarera Don Pedro, Inc. in Batangas and Central Azucarera de la Carlota, Inc.  in Negros Occidental.

It also has a bioethanol business and is one of the few that serves the demands of local oil and alcohol companies for bioethanol products.

The sugar producer posted revenues of P7.67 billion in its previous fiscal year, which ended in September 2012. Net income during the period hit P667 million, reversing losses of P742 million.

First Pacific owns part of Philippine Long Distance Telephone Co. Its other Philippine investments include Philex Mining Corp., Manila Electric Co., Maynilad Water Services Inc. and North Luzon Expressway.