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MANILA – Friendship matters, as far as the chairman and chief executive of San Miguel Corp. is concerned, who on Friday sold his remaining stake in Southeast Asia’s biggest food-and-beverage conglomerate to a trusted lieutenant at a huge discount.
Market sources said about P37 billion worth of SMC shares were crossed at the Philippine Stock Exchange at P75 a share, a 35 percent discount from the stock’s closing price of P114 apiece.
In a statement, 77-year old Eduardo ‘Danding’ Cojuangco Jr., who battled with post-Marcos era governments and coconut farmers for ownership of the conglomerate, said he sold his 11 percent interest to the company’s chief operating officer, Ramon S. Ang, on “friendly terms.”
Source: Philippine Stock Exchange
The 11 percent stake was what remained in Cojuangco’s hands after another key stakeholder, Top Frontier, exercised its option to acquire another nine percent. Top Frontier had signed an option agreement in 2009 to acquire Cojuangco’s shares in SMC.
In explaining his choice of successor, Cojuangco described Ang as, "a person in whom I have full trust and confidence and rightfully deserves utmost recognition for transforming the company into a highly diversified and profitable business conglomerate.”
“From the time I requested Ramon to join me in the company, he has continuously dedicated one hundred percent of his time and effort in ensuring the growth of the San Miguel Group to the benefit of its shareholders," Cojuangco said.
“There is no other person deserving of this opportunity to control a significant stake in the company that is so close to my heart, than Ramon. San Miguel has made a distinctive impact because of him and he cares about the company and its people. I am confident he will lead San Miguel to further greatness,” Cojuangco added.
To his credit, Ang has steered SMC's diversification into power, oil, infrastructure, mining, telecommunications, airlines, among others.
He earlier said these new businesses would help SMC hit its P1 trillion revenue target by next year.
But the market may not appreciate Cojuangco’s move the same way “Boss Danding” would, according to analysts. In fact, the company's stock has yet to participate in the overall stock market's run-up since the start of the year - and this despite Ang's efforts to talk up the conglomerate's prospects.
Jose Vistan, senior research manager at AB Capital Securities, said the sale to Ang may not sit well with minority shareholders.
For one, there is a question of the shares still not being paid for, Vistan said.
Secondly, minority shareholders might complain that they were not given the chance to buy those shares for the same price, he said. Twenty-four percent of the company is in the hands of the public.
The sale to Ang also raises the question of why Cojuangco didn’t hand over ownership to his two sons. Analysts said one reason for that is Cojuangco views Ang – who knows the company from top to bottom – as someone who could handle SMC’s future legal battles. Indeed, the history of SMC is intertwined with the country’s politics.
The sale to Ang capped several years of court battle with post-Marcos era Philippine governments that claimed Cojuangco's SMC stake was ill-gotten, a result of his close relationship with then President Ferdinand Marcos. Ang has been with Cojuangco throughout that difficult period.
The Supreme Court has since ruled that Cojuangco rightfully owns the subject SMC shares.
The government, through the Presidential Commission on Good Government, still holds shares in SMC, but had agreed to convert its ownership in the conglomerate into non-voting preferred shares, which the company will redeem in the near term.
"He may just be feeling old. It might something to do with his health,” Jun Calaycay of Accord Capital Equities Corp. said, as to why Cojuangco sold out now.
“It may help defuse tension and free San Miguel from possible 'insinuations' due to his relations with the President. The company is, after all, into heavily regulated industries," Calaycay said.
Cojuangco supported his nephew, Benigno Aquino III, in his successful bid for Malacanang in May 2010.
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