Corporate battles

PLDT. I would love to be a fly on the wall in these board meetings. Just imagine the JG Summit board’s conversations on how they cannot have access for due diligence on a multimillion-dollar acquisition. The board of PLDT, using the rationale that they are protecting the minority shareholders from the evil competitor, have blocked off Mr. John’s effort to perform any due diligence as well as to go on the board of PLDT. (An obvious defense move, I am sure Mr. John’s swat team has thought of.)

Due diligence is a gray concept. I call it "Kicking the Tires." When one buys a new or used car, one brings a mechanic or a pseudo-mechanic who pretends to look at the engine and checks or validates whether the car is worth the asking price or not. Literally, you kick the tires.

In the case of buying a company, buyers usually bring in the accountants, the lawyers and the engineers to make sure what they are buying is really there or the representations of the seller are true, that there are no legal skeletons in the closet. They also bring in the operations people to make sure there are savings to be had. They are there to validate that the holy grail of "synergy" will be there when the cash changes hands.

Although due diligence is not an exact science, it is a necessary step nonetheless. If I cannot have my due diligence team in, I would walk away from the deal or demand such a high discount from the seller, that even on a worst-case scenario that I am buying a morgue of skeletons, my investment will still have a decent return.

I would not put it past Mr. John’s investor group to buy up all the debt at discount and control the company both at the equity and debt levels.

My Two Cents: Both Mr. Manny and Mr. John are excellent corporate chess players, and so far, there have been excellent moves on both sides. For punters, it is hard to make a call on who will win the end-game.

Floods, traffic reports, et al

In the last few months, the monsoon rains and tropical depressions have hit this city like a ton of bricks. If you are just now finishing up your house and your contractor is about to turn over to you, now would be a good time to see if he did a good job or not.

Intense rain causes traffic jams as our road infrastructure was designed without any forethought about drainage; if there was any forethought, then I am sorry but the road designer should be put to jail for economic sabotage.

Received word that our friends at the Asian Development Bank receive traffic reports on flood situations at about 7:30 a.m. in their e-mail boxes. This early warning system gives them an ability to arrange their day and manage their expectations and their routes. Then again if they do not have PCs at home, this report does not really work. Maybe, if the ADB bought DFNN’s Mobile Messenger, all its folk can receive an early broadcast of the flood situation with or without a PC. (Very shameless plug for a good product!!)

I work at the Hatchasia Globalcity Center at Fort Bonifacio. I don’t really have to worry about floods, as the horizontal infrastructure is world-class. The roads are not under water and there is no traffic here at the Global City.

I am not so sure if the folk at Metro Pacific Corp. can hold their heads above water though. As with PLDT, this company’s ownership at Fort Bonifacio is under attack as well. Maybe, the Bonifacio Land’s board will use the same defense since Mr. John is into real estate too.

My Two Cents: A wise man once said, "Silent water runs deep, but if you have a bad drainage system, you drown."

(Dickson Co is CFO for both Dfnn and HatchAsia.com. For comments or suggestions, e-mail at [email protected].)