San Miguel still in talks to buy PAL

ABS-CBNnews.com

Posted at 01/31/2012 4:37 PM | Updated as of 02/01/2012 9:55 AM

MANILA, Philippines - San Miguel Corp. (SMC) is continuing its negotiations to buy flag carrier Philippine Airlines (PAL).

In a mobile text message to ABS-CBN News, San Miguel president Ramon S. Ang said the company was "still in talks" to acquire PAL.  Ang was asked whether SMC has decided to buy PAL, extend the due diligence period or continue talks.

A separate source said that SMC was in "advanced" stage of negotiations for PAL. 

Last December, ABS-CBNnews.com reported SMC was in talks with PAL officials for "a possible investment in the company. SMC inked a memorandum of understanding with PAL to do "due diligence" work on the flag carrier. The due diligence was slated until January 31.

The same source said the due diligence was being finalized, adding that some PAL officials are likely to be retained after the takeover.

PAL did not immediately reply to a request for its comment.

San Miguel earlier said PAL's owner Lucio Tan sought its help in its refleeting program.

"We confirm that the company was invited by Mr. Lucio Tan, the controlling shareholder of PAL Holdings Inc to participate and assist in the refleeting and modernization of the aircraft of Philippine Airlines in preparation for the projected heavy influx of tourists in the coming years," San Miguel said last December.

A few weeks ago, Tan further fueled speculation saying the airline was "for sale" at the right price. However, PAL officials said Tan's statement on sale was merely rhetorical.

The airline business is in line with San Miguel’s diversification into infrastructure-building. San Miguel is investing about $300 million to modernize the Godofredo P. Ramos airport in Caticlan, the gateway to the world-famous Boracay. - Reports from Coco Alcuaz, ANC; and Ira Pedrasa, ABS-CBNnews.com

Source: http://www.abs-cbnnews.com/business/01/31/12/san-miguel-still-talks-buy-pal

MVP mum on PAL buy-in talks

By: Paolo G. Montecillo

Philippine Daily Inquirer

1:37 am | Monday, January 30th, 2012

MANILA, Philippines—Business executive Manuel V. Pangilinan remains mum on talks that he and a rival group are in to acquire the nation’s flag carrier, Philippine Airlines (PAL).

In a recent chance interview, the Philippine Long Distance Telephone Co. (PLDT) chairman neither confirmed nor denied that he was in discussions with any group for a majority stake in the airline.

“I’ve said all I need to say on the matter,” Pangilinan told reporters.

Aside from Pangilinan, the only other group said to be eyeing PAL was diversified conglomerate San MiguelCorp.

Earlier this month, PAL chairman Lucio Tan, one of the country’s wealthiest individuals, said he was willing to sell his majority stake in the company “for the right price.”

Tan was also quoted to have said that both Pangilinan and SMC president Ramon S. Ang were his “friends.”

The company’s management, however, later clarified that Tan was merely making a rhetorical remark on the possibility of letting go the financially troubled carrier.

In a previous disclosure to the Philippine Stock Exchange (PSE), San Miguel confirmed that it had been invited to participate in the “refleeting” of PAL’s fleet of planes, although officials were mum on whether this would involve the infusion of fresh equity resulting in a change in control.

If Pangilinan were to secure a controlling stake in PAL, industry watchers say this may prove to be a difficult situation for the group since the Gokongwei family that owns the airline’s chief rival, Cebu Pacific, also owns a substantial stake in PLDT.

PAL, which used to monopolize in the country’s air travel, has struggled to keep up with changing industry dynamics that were a result of the industry’s liberalization instituted by the Ramos administration in the 1990s.

Because of its “full service” business model, PAL has been unable to match the low ticket prices offered by budget carriers like Cebu Pacific.

Due to soaring fuel prices, PAL reported a $39-million net loss at the end of September 2011, the end of the first half of the airline’s April to March fiscal year. This was a reversal from the $26.7-million profit the airline booked a year earlier.

Source: http://business.inquirer.net/42033/mvp-mum-on-pal-buy-in-talks