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San Miguel-GSIS Deal: Buy Out Or Bail Out?

October 28, 2008

San Miguel Corporation, the nation’s largest conglomerate is awash with cash and always on the hunt for good investments.

So it’s probably a very sound business decision for the Eduardo Cojuangco Jr-led firm to buy out the 27-percent holdings of GSIS in Meralco.

Surely, Mr. Cojuangco does not share Garcia’s bellicose assertions that Meralco is “mismanaged.”

The PhP30-B deal has SMC buying each share at double the closing price of Meralco shares yesterday, with GSIS being paid over 3 years with interest.

You have to credit controversial GSIS hief Winston Garcia for timing if not sharp business sense in the face of intense talk around town that GSIS investment losses in the continuing financial meldown in the US and elsewhere this month range from a low of $400-M to a high of $600+M

The ‘Boss’s’ own reading of the lay of the land in both the business and political sense are unquestionably top caliber.

So it makes absolute  sense that the decision to buy out GSIS holdings in Meralco is read as a buy-out-cum-bail out.

This along with the fact that now, San Miguel is not only  close to the country’s largest power distributor geographically, but also tantalizingly near the Lopez clan’s other crown jewel, ABS-CBN, with 2010 drawing close.

One Comment leave one →
  1. kaku permalink
    January 26, 2009 2:43 pm

    yup, it’s really probable that GSIS’ sale of its shares in MERALCO is somewhat a preparation for the global financial challenge. but it should be noted why it was San Miguel that bought the shares. I think this is something we should look on. If this move is healthy for San MIguel or simply because it was healthy for Danding and his cohorts.

    I am new blogger by the way and got bumped into your blog.
    I have post about what I think of this current plans of Danding for SMC.

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