Bank of Commerce sale falls apart

MANILA, Philippines - Diversified conglomerate San Miguel Corp.’s (SMC) plan to unload subsidiary Bank of Commerce fell through after CIMB Group Holdings walked away from the supposed P12.2 billion transaction.

In a disclosure to the Malaysian Stock Exchange over the weekend, CIMB said the parties failed to reach an agreement after extending negotiations when the sale and purchase agreement (SPA) lapsed.

“As such, the parties will not proceed with the proposed acquisition, CIMB said.

Surces said land issues were one of the factors blamed for the failed deal.  Under the Philippine Constitution, foreigners are barred from owning land in the country.      

CIMB said the SPAs with sellers San Miguel Properties Inc., SMC Retirement Plan and Q-Tech Alliance Holdings Inc. lapsed in December while the deal with minority shareholders expired in February.

In 2012, CIMB agreed to buy SMC’s 60-percent stake in BoC for P12.2 billion. SMC currently owns 84 percent of the mid-sized lender.

 Regulators Bangko Sentral ng Pilipinas and Bank Negara Malaysia had already approved the deal, which would have allowed CIMB to gain a foothold in the Philippines’ banking sector while giving SMC additional cash for its diversification projects.

Early this month, SMC said the transaction would push through in July.

CIMB is the second largest bank in Malaysia with presence in eight of 10 ASEAN nations (Malaysia, Indonesia, Thailand, Singapore, Cambodia, Brunei, Vietnam and Myanmar). It also has market presence in China, Hong Kong, Bahrain, India, Sri Lanka, the US and UK.

BoC, on the other hand,  is currently the country’s 16th largest bank in terms of assets of around P92.7 billion as of end-2012.

From its core brewery and food business, SMC has expanded into power production (SMC Global Power Corp.), downstream oil sector (Petron Corp.), packaging (San Miguel Yamamura Packaging Corp.), airline (Philippine Airlines) and several infrastructure projects like the Caticlan airport, Skyway, and the NAIA Expressway.

The conglomerate earlier said it iwas investing $25 billion in a foreign oil and natural gas company.

In the first quarter, SMC’s net earnings sank by half to P4.2 billion from P8.5 billion from a year ago,  weighed down by the effects of the sin tax law, easing oil prices and lower foreign exchange gains.