Hong Kong-listed conglomerate First Pacific Co. Ltd. is rapidly expanding its business portfolio in the Philippines through acquisitions in line with its strategy to enhance shareholder value and secure new investment opportunities in sectors that offer long-term value appreciation.
Fresh from its purchase of a 67.1 percent stake in Manila North Tollways Corp. through its local unit Metro Pacific Investments Corp., First Pacific just acquired a 20.16 percent stake in Philex Mining Corp., making it the single largest shareholder of the country’s biggest mining company.
“At 20 percent, that makes us the single biggest shareholder,” said Denis Lucindo, MPIC assistant vice president for investor relations group.
He said the First Pacific group is bullish on the prospects of the mining sector as metal prices continue to appreciate, driven by strong demand for gold and other precious metals.
“Right now, there are a lot of opportunities in the mining sector. Mineral prices remain strong,” Lucindo said.
First Pacific, controlling shareholder of Philippine Long Distance Telephone Co., forged Friday an agreement with Philex to buy 778.444 million common shares of the mining firm at P7.92 each share for a total of P6.165 billion.
The price represents a 10 percent premium over the acquisition cost of Philex which shares have been accumulated as part of its completed share buyback program and which are currently held in treasury.
The total consideration for the purchase will be paid in two equal tranches - the first 10.08 percent on Oct. 13, 2008 and the second 10.08 percent on or before Nov. 30.
The agreement further provides for the appointment of two directors to the Philex board upon completion of the transaction. First Pacific managing director Manuel V. Pangilinan will be nominated to take one of the two board seats.
Philex chairman Walter Brown said the entry of a strategic investor will provide Philex with a strong partner to allow it to vigorously pursue the development of the Boyongan mine and various other claims and prospects.
“That will clearly strengthen Philex’s portfolio of mining assets and, thus, cement its place as the largest and most profitable mining company in the Philippines,” Philex said.
Last week, Philex took over control of the Boyongan site by buying the 50 percent stake of its partner Anglo American Exploration (Philippines) BV for $55 million. Philex Gold Philippines Inc., which is 81-percent owned by Philex, owns the remaining half of the project.
Philex and Anglo discovered the Bongoyan deposit in 2000.
Anglo provided all the funds for exploration and completed the pre-feasibility study on the site where it discovered other mineralized centers in December 2007.
In its recent report to shareholders, First Pacific said it is also looking at mining opportunities in China aside from the Philippines.
Lucindo said the purchase is part of the group’s stategy “to create long term value for its shareholders by actively and carefully considering opportunities in the vital sectors of the Philippine economy, which include mining and port operations. The company is engaged in real estate development through Landco, health care services through Makati Medical Center and Davao Doctors, and the water business through Maynilad Water Services Inc.
“We believe that opportunities continue to exist in Asia and given the recent adverse developments in the global and regional equities markets - where asset values have been marked down - it is likely that a new window of investment opportunities is opening up. It is of course not clear how long this investment window will stay open. We will continue to review and evaluate such opportunities in accordance with our investment criteria,” Pangilinan earlier said.