First Pacific eyes bigger stake in Roxas firm

Hong Kong-based First Pacific Co. Ltd. is prepared to invest more in Roxas Holdings Inc. and obtain a potential controlling stake if the opportunity were available, CEO Manuel V. Pangilinan said last week.

The company made its initial entry as announced on Nov. 14 when it agreed to buy a 31-percent interest in Roxas Holdings, the country’s third-biggest sugar refiner and largest sugar miller, at P8 a share or P2.23 billion. The shares were acquired from the company’s parent firm, Roxas and Co. Inc., whose 66-percent stake will be pared down to 35 percent.

First Pacific, through unit First Pacific Natural Resources Holdings BV, said it would buy out other shareholders to increase its stake to 34 percent, just short of the 35-percent mandatory tender offer threshold, causing Roxas Holdings’ share price to tumble.

Beyond that, Pangilinan said last week that they were interested in buying more shares of Roxas Holdings, led by its executive chair Pedro Roxas.

“I think we have the ability to increase our stake. If we can gain [control], sure,” Pangilinan said at the sidelines of the MVP Bossing Awards. “If there is an opportunity to expand in the sugar business, then they will need more capital. We told Pedro Roxas we are prepared to put in new capital.”

Roxas Holdings shares have more than doubled in the two weeks before the deal was announced. It has declined almost 15 percent to P6.20 a share Friday compared to P7.28 a day before the announcement on Nov. 14.

The Philippines is considered Southeast Asia’s third-biggest sugar producer with 24 million tons of sugar cane production last year. It was behind Thailand with 96.5 million tons and Indonesia, with 26.3 million tons.

Pangilinan said they were keen to invest in other Philippine agriculture sectors like palm oil.

“We’ve always been interested in palm oil. We are still looking. There are only one or two palm oil producers here,” said Pangilinan while adding First Pacific may choose to strike it out on its own.

“It would probably have to be a greenfield type of investment. But it’s hard to look for land,” he 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.

Roxas Holdings has a capacity of 38,500 tons of cane a day, more than 50 percent greater than the number two producer and by itself nearly a fifth of the entire country’s sugar production, First Pacific said.

First Pacific aims to improve these numbers by raising capacity utilization and helping farmers improve yields.

Roxas Holdings has three sugar mills, one in Batangas and two in Negros Occidental. It also has an ethanol plant in Negros Occidental with a capacity of 100,000 liters a day. Miguel R. Camus