First Pacific takes over Roxas Holdings

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Emeterio Sd. Perez

Emeterio Sd. Perez

The Indonesian-owned First Pacific Co. Ltd., which is based in Hong Kong, has finally taken over the majority ownership of Roxas Holdings Inc. (RHI) after a First Pacific unit acquired RHI’s 241.78 million treasury shares on Feb 27.

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First Pacific’s takeover of the sugar central may have also been bolstered by the sale of 31.071 million RHI shares, or 3.42 percent, by Pedro Roxas, chairman of the board, to a buyer or buyers who have not been named.

That is, if the buyer was also First Pacific Agri Holdings Corp., an affiliate of FP Natural Resources Holdings B.V., which, in turn, is a First Pacific company.

The acquisition of RHI treasury shares is estimated to cost First Pacific Agri, if it is, indeed, the buyer, P1.692 billion at P7 per share, which Roxas Holdings bought back at an average price of P2.964. Will First Pacific, as the mother company, remit this much money in US dollars to pay for RHI shares?

As of Dec 31, 2014, First Pacific Natural Resources Holdings B.V. owned 309.197 million RHI shares, or 33.995 percent of 909.552 million outstanding shares, just a few shares or a little over one percent of the total 318.342 million shares or a 35 percent stake held by Roxas & Co. Inc.

The acquisition by FP Agri of treasury shares expanded RHI’s outstanding shares to 1.151 billion and increased the ownership of First Pacific group through two units to 550.978 million shares, or 47.856 percent of the resulting 1.15 billion outstanding shares.

The increase in Roxas Holdings’ outstanding shares, meanwhile, effectively diluted to 27.65 percent the 318.342 million shares owned by Roxas & Co., which used to be the controlling stockholder.

Tapping MPIC
Sourcing the money to pay for the acquisition of RHI’s 241.781 million treasury shares may not be a problem for First Pacific, which could tap local funds to pay for the acquisition.

What a coincidence that when First Pacific needs money, Metro Pacific Investments Corp. (MPIC) turns up to be of help.

Metro Pacific Holdings Inc., which may be a Filipino company as MPIC identifies it in an ownership filing, owns 19.523 billion shares, or 62.883 percent of 31.046 billion outstanding shares, divided into 14.523 billion common shares, or 55.76 percent, and 5 billion Class A preferred shares.

The question that the public may ask out of curiosity, perhaps, could be: What does MPIC’s ownership profile have to do with the needed money?

The answer is much and it is in billions: P6.787 billion is such a huge cash hoard that could easily meet First Pacific’s need for funds to finance its takeover of Roxas Holdings. It is dividend that proves that the investment made by the Indonesians is paying off. Remember, they came in December 1985 by taking over Metro Drug Inc., which they turned into their local flagship through legally corporate maneuvers.

In a posting on the website of the Philippine Stock Exchange, MPIC disclosed the board approval on Feb. 26 of P0.037 dividend per common share and P1.25 per preferred share.

Computed, this means Metro Pacific Holdings would get P537.349 million and P6.25 billion for a total of P6.787 billion, that would be due the 14.522 million common shares and 5 billion preferred shares that it owns.

And by the way, here is another fund source for FP Natural Resources: the board of Manila Electric Co. (Meralco) has approved a P3.66 per common share dividend that would give Beacon Electric Asset Holdings Inc., also a First Pacific company, P1.855 billion for its 506.769 million Meralco shares, or 44.96 percent.

MVP, chairman of the boards
Manuel V. Pangilinan, the chairman of listed companies in which First Pacific, through its local units, has either majority or significant holdings, may replace Pedro A. Roxas as chairman of the board of Roxas Holdings.

If First Pacific has dominated the board of Manila Electric Co., where it owns 44.96 percent, why should it not be able to control the board of Roxas Holdings? After all, as owner of 48 percent of RHI outstanding shares through FP Natural Resources and First Pacific Agri, it is the sugar central’s single biggest controlling group.

Besides, by doing that, MVP would only be staying faithful to an unwritten slogan by First Pacific that when it comes in, it comes in for control. In Roxas Holdings, he could elect five of the nine members of the board, including the independent directors, to take over Roxas & Co.

With all these developments, will Victorias Milling Co. Inc., another sugar company in which First Pacific is not already the controlling stockholder, be the next takeover target of the Indonesian group? Will businessman Lucio Tan allow this to happen?

esdperez@gmail.com

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1 Comment

  1. Gloria M. Kuizon on

    The Chinese partner-friends of the late Suharto of Indonesia will beat the Chinese partner-friends of the late Marcos of the Philippines.
    But the wizard is the Filipino (?) Manny Pangilinan who was among the first global finance experts of Asean with the Marcos-blessed Bancom Group of Sixto Roxas and wisely joined the Suharto-blessed Liem Siu Liong.