Bloomberg News

San Miguel in Talks With CIMB to Sell Bank Stake, Ang Says

October 06, 2011

(Updates with CIMB’s confirmation in fifth paragraph.)

Oct. 6 (Bloomberg) -- San Miguel Corp., the largest Philippine company by assets that’s seeking to expand in Malaysia, said it’s in discussions to sell a stake in Bank of Commerce to CIMB Group Holdings Bhd.

“We’re in talks,” San Miguel President Ramon Ang said in an interview in Manila today. CIMB is “one of the biggest banks in Malaysia” and San Miguel plans to sell “a portion” of the Philippine lender to the Malaysian company, he said, declining to provide more details.

The Philippine brewer has been expanding into oil refining, power and infrastructure to triple the return it previously earned from food and drinks alone. San Miguel agreed in August to acquire Exxon Mobil Corp.’s 65 percent stake in Esso Malaysia Bhd. and said it may spend as much as $1.2 billion upgrading Esso’s oil refinery and renovating gasoline stations.

“A purchase by CIMB will pave the way for San Miguel to link with a strong partner in Malaysia, where it’s putting a substantial investment through its purchase of Esso,” said Alex Pomento, head of research at Macquarie Group Ltd. in Manila. CIMB “has the financial muscle to strengthen” the Philippine lender, he said.

CIMB, Malaysia’s second-largest lender, confirmed the talks with San Miguel after the close of trading in Malaysia. “These discussions are currently at an early stage and further announcements will be made in the event of any material developments,” it said in an e-mailed statement.

Bank Stake

San Miguel said in June 2009 its property unit and retirement fund secured a 51 percent stake in Bank of Commerce. In January, San Miguel Properties Inc. bought an additional 7.16 percent stake in the bank.

Bank of Commerce is the Philippines’s 16th-largest lender with assets of 90.7 billion pesos ($2.07 billion), data from the Bangko Sentral ng Pilipinas showed.

CIMB, which also operates in Singapore and Indonesia, bought 70 percent of Thailand’s Sicco Securities Pcl last month. CIMB and bigger rival Malayan Banking Bhd. said in June they were pulling out of separate talks to acquire Kuala Lumpur-based RHB Capital Bhd.

CIMB rose 3.4 percent to 7.06 ringgit at the close in Kuala Lumpur trading, the highest in more than three weeks. San Miguel advanced 0.2 percent to 113.50 pesos at the noon close of trading in Manila, snapping three days of declines.

“This is still part of their goal to raise the war chest and to consolidate into infrastructure,” said Jonathan Ravelas, a market strategist at Banco de Oro Unibank Inc. “It helps them raise capital and at the same time, a partnership with another group could open more doors for them.”

--With assistance from Joyce Koh in Singapore, Clarissa Batino and Ian Sayson in Manila, Yen Kuan Gan and Pooi Koon Chong in Kuala Lumpur. Editors: Linus Chua, Russell Ward

To contact the reporter on this story: Cecilia Yap in Manila at cyap19@bloomberg.net; Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Rebecca Evans at revans6@bloomberg.net


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