SEC mulls tender offer rule on SMC purchase of Petron stake

The Securities and Exchange Commission (SEC) is exploring whether there is a need to compel San Miguel Corp. (SMC) to comply with the tender offer rule given the entry of two of Southeast Asian food and drink group’ top officials on the board of directors of giant oil refiner and retailer Petron Corp.

Just last Thursday, Petron announced the election of three San Miguel key executives to the board of Petron. They are San Miguel chair and chief executive officer Eduardo “Danding” Cojuangco Jr., San Miguel vice-chair, president and chief operating officer and Cojuangco’s legal counsel and San Miguel director Estelito P. Mendoza.

Ang was appointed as the new chairman of Petron, replacing Nicasio Alcantara who will stay on as director of the oil firm.

Cojuangco replaced Craig Webster, the British head of the legal and transaction management group of London-based investment fund Ashmore. 

Mendoza, on the other hand, took over the slot vacated by former environment secretary and presidential adviser Michael Defensor.

The appointment of San Miguel executives to Petron’s 10-man board followed an  agreement signed last week wherein the food and beverage giant secured an option to acquire up to 50.1-percent interest in the oil refiner. San Miguel has two years from Dec. 24, 2008 to exercise that option.

San Miguel has committed to pay around $10 million to retain exclusive right to purchase 50.1 percent of Ashmore’s total 90.57-percent shareholdings in Petron.

The option agreement and the election of San Miguel officials fuelled suspicion that these could be part of an attempt by San Miguel to circumvent the tender offer rule.

“We will look into that and see whether there is a need to require San Miguel to comply with the tender offer rule,” said an SEC official who requested not to be named.

To date, San Miguel has no direct interest in Petron not yet anyway. 

The same official, however, said that San Miguel may not be required to make a tender offer at this time considering that the threshold level that will trigger a tender offer has not yet been reached or crossed. 

Nevertheless, the SEC official said it would look into the matter to ensure a level playing field and that securities laws are complied with.

There were talks in the market that San Miguel was the real buyer of the government’s remaining 40-percent stake in Petron, and not Ashmore. Market sources said the real buyer didn’t want to come forward for fear it would be required to comply with the tender offer rule.

Under the tender offer rule, any investor who buys at least 35 percent of a company must offer the same terms to other shareholders of the target firm.

The government’s sale of its remaining stake in Petron has brough Ashmore’s total shareholdings in the oil refiner to 90.57 percent. The balance of a little over nine percent is held by the public.