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LAST_UPDATETue, 15 May 2018 11am

ExxonMobil Corp: Esso Malaysia Sale to San Miguel Fair and Justified

KUALA LUMPUR, 28 AUGUST, 2011: The proposed sale of Exxon Mobil Corporation's 65 per cent interest in Esso Malaysia Bhd and other businesses in the Malaysian downstream petroleum sector to San Miguel Corporation (SMC) of the Philippines was fair and justified, says ExxonMobil's vice-president Stafford T. Kelly.

 

He said the bidding was on a competitive basis with 20 companies, including seven local firms, were initially interested and SMC's offer was the best on the table.

 

 

San Miguel, other than giving the best value for all the three entities in the Esso Group, was the only company to include plans to take over and expand the 48-year-old oil refinery in Port Dickson, he said.

 

 "Other bidders (including from Malaysia) were not interested in the refinery and they wanted to shut it down," he said in a audio-conference with the Malaysian media from the United States today. Kelly said the move showed ExxonMobil's commitment in not letting down the workforce in the refinery just like that.

 

ExxonMobil International Holdings had sealed the deal with SMC for the latter to sell its 65 per cent stake in public-listed petroleum trading company, Esso Malaysia Bhd (EMB), and its wholly-owned ExxonMobil Malaysia Sdn Bhd (EMMSB) and ExxonMobil Borneo Sdn Bhd (EMBSB) for a total US$610 million or RM3.50 a share of EMB.

 

To a question as to whether Boustead Holdings Bhd or its subsidiary, the Armed Forces Fund Board (LTAT, were among the companies which made an offer, he replied in the affirmative but clarified that it was not at RM5.20 as speculated in the media.

 

He reiterated that SMC's offer was the best and it was the only company among the 20 that wanted to buy the Port Dickson refinery as well.

 

Kelly said SMC offered a 25 per cent premium on the average price of EMB's shares for the last six months of RM2.80.

 

Only after speculations of the sales and purchase agreement did the price shot up to RM4.95 from the pre-lunch time close of RM4.33 on Aug 17.

 

He said ExxonMobil mutually agreed with SMC that the Philippines' company would not retrench workers, but in return would expand the human capital, with the locals given first priority.

 

During the bidding process, he said, every party was given enough space to have discussions and evaluation on ExxonMobil, and finally three strong parties were recognised and finalised.

 

"Only San Miguel was the foreign company," he said.

 

The sale, expected to be completed in six months, is subject to approvals from three key ministries.

 

Kelly said he has spoken to International Trade and Industry Minister Datuk Seri Mustapa Mohamed on the matter.

 

 "My boss (ExxonMobil Corp chairman and chief executive Rex Tillerson) has spoken to the Prime Minister (who is also Finance Minister Datuk Seri Najib Tun Razak) about the sale," he said.

 

To date, the response from the ministers and the authorities was encouraging, given that the transaction was from a foreign company to another foreign entity, and hopefully the sale process can be executed in a smooth and proper manner.

 

"We are in the midst of finalising the papers for submission for all the three ministries," he said.

 

Kelly dismissed claims that ExxonMobil would reopen the bidding process due to pressure from the Malaysian government and local companies.

 

 "A fair level of consideration has been given and San Miguel came out as the winner," he said, adding that both parties have signed the sales and purchase agreement.

 

To concerns that a Malaysian company could fall to a company which produces beer, Kelly said the situation was true many years back.

 

 "Now the company is a conglomerate and their business is diversified into many segments.

 

 "Currently, the company derives its revenue mostly from non-food and beverages businesses, which clearly reflects the company's intention to clear its image as a beer producing firm," he added.
  

 

 

- Bernama

 

 

 

 

 

 

 

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