Saudi Aramco to sell Petron stake for $550M
Saudi Aramco is selling its 40-percent stake in the country’s top oil refiner Petron Corp. to London-based investment fund Ashmore Group for $550 million, Petron officials said yesterday.
Petron said in a statement that SEA Refinery Holdings, a company owned by emerging market investor Ashmore, had offered to buy Saudi Aramco’s 3.75 billion shares in Petron at P6.07 per share. Petron’s stocks closed at P6 yesterday.
Petron did not say if the offer was solicited by Aramco, but said it would continue to focus on sustaining its growth momentum.
The deal requires clearance by state-owned Philippine National Oil Co. (PNOC), which also owns a 40-percent stake in Petron and has right of first refusal, PNOC officials said.
Senior PNOC officials said they were caught by surprise by the Ashmore offer.
However, President Arroyo welcomed the entry of the Ashmore Group in Petron as a powerful message that investor confidence in the country is strong and validates a successful privatization of an important Philippine company.
Saudi Aramco, the state-run oil firm of the world’s biggest oil exporter
But it has also pulled back from some smaller markets, selling off its stake in a Greek refiner several years ago.
Saudi Aramco, which bought the Petron state in 1994 shortly before the oil firm went public, was unavailable for comments.
Petron chairman Nicasio Alcantara said Saudi Aramco had committed to supply crude even if it sold its stake.
Almost all of Petron’s crude oil supply is sourced from Saudi Aramco through a long-term supply contract.
“We have had a strong and very positive relationship with Saudi Aramco over the past 14 years, and we look forward to continuing our relationship commercially under Saudi Aramco’s commitment to maintain crude oil supply ,” Alcantara said.
“Having a fund in place of Saudi Aramco may not be positive for minority shareholders,” said Jose Vistan, an analyst at AB Capital Securities Inc. Twenty percent of the firm is held by individual investors.
“With Saudi Aramco, oil supply was assured and Petron was benefiting from the technical expertise offered by Aramco,” he said, adding that Petron’s profits were expected to improve as its petrochemical business takes off commercially this year.
Alcantara said it remains “business as usual” at the company although they have already informed their 1,300 employees, of which 400 are working at the
Petron supplies nearly 40 percent of the country’s total fuel requirements.
“Over the years, Petron has built a solid business that has a resulted in undisputed industry leadership, an extensive and efficient distribution network, a wide customer base, and an array of world-class products and services. This will not change, regardless of the company’s ownership structure,” he said.
Ashmore is the latest in a series of financial investors to pursue refinery deals, hoping that a five-year profit margin boom will continue as the construction of new capacity lags behind growing demand from China, India and the Middle East.
Ashmore is a global asset management company listed in the London Stock Exchange with assets under management amountin to $36.5 billion and has a strong track record of constructive partnerships worldwide, including significant Philippine-related investments over a period of many years.
Ashmore has invested $20 million in Maynilad Water Services Inc. last year and $10 million in information technology firm ISM Communications Corp., which holds a 57.7-percent stake in Eastern Telecommunications Philippines Inc.
Petron hopes to increase gasoline production and extraction of propylene, a petrochemical used for food packaging materials and impact-resistant plastics, with the opening of a new facility at its
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