Gokongwei offers P24.56B for Aramco shares in Petron

By Riza Recio

05/08/2008

The local Gokongwei group and US-based investment bank Morgan Stanley expressed interest in acquiring a 40-percent stake in the country’s biggest oil refiner Petron Corp. that Saudi Arabia’s state-owned Saudi Aramco is unloading, Energy Secretary Angelo Reyes said yesterday.

Saudi Aramco had entered into an agreement with the London-based Ashmore Group through its subsidiary, Sea Refinery Holdings for the sale of its 40-percent stake in Petron at $550 million but the government through the Philippine National Oil Co. (PNOC), which owns another 40 percent of Petron, has the right of first refusal on the sale of Saudi Aramco’s shares.

JG Summit Petrochemical Corp., the Gokongwei company offering to buy the shares, wrote Reyes expressing its interest to buy 3.75 billion Saudi Aramco shares in Petron.

“We are interested in making an offer to purchase the Petron shares at a price of P6.55 per share,” or an equivalent of P24.56 billion, according to company president Lance Gokongwei.

Gokongwei’s offer was higher than Ashmore’s equivalent P22.5 billion price offered to Saudi Aramco.

The two groups have expressed interest on the shares being sold by Aramco Overseas to the Development Bank of the Philippines and the ING Bank, which have been chosen as their financial advisor.

Reyes said the board of directors of the PNOC will meet today to decide on the offers it received and its the exercise of its rights over the Aramco shares including identifying an “illegible party “ to exercise the right to transfer.

“The PNOC board has up to May 12 to decide on what to do,” Reyes said.

Reyes added during the share agreement signed between the government and Aramco Overseas it was stipulated in the contract that should the other party decide to sell their stake, the government through PNOC should be given the right of first refusal.

He said they have called the meeting together with the representatives from the Department of Finance, the Department of Trade and Industry, Department of Energy, PNOC and the Department of Justice to determine what course of action they should take.

In 1994, the government sold its 40-percent shares with PNOC to Aramco for $ 535 million and it was agreed that PNOC would be given the right to match or assign should the Saudi-based oil company decide to sell its shares.

Petron supplies nearly 40 percent of the country’s total fuel requirements.

In 2007, Petron posted a net income of P6.4-billion, up by 6.3 percent over its 2006 profits. Petron is the country’s largest refiner.

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