Boustead defends unsuccessful bid for Esso Malaysia downstream asset sale

Esso Malaysia’s share price went up 16 sen (US$0.05) and closed at RM3.67 (US$1.17) amidst speculation that the fight for the control of the company’s assets is far from over. Bousted Holdings Bhd defended its unsuccessful bid for the acquisition of a controlling stake in Esso Malaysia Bhd after the U.S. giant ExxonMobil Corp. signed a deal last month to sell its stake to San Miguel Corp., a Philippine-based food and beverage conglomerate. The agreement is pending approval from the Ministry of International Trade and Industry, and the Ministry of Domestic Trade and Consumer Affairs.
San Miguel Corp.’s offer; Bousted’s defense
In a letter to Esso Malaysia Chairman Hugh Thompson, ExxonMobil Vice-President Stafford Kelly explained the reasons behind the selection of San Miguel. Thompson said that the offer from the Philippine conglomerate had significantly better contractual terms and obligations and offered the most attractive purchase price. San Miguel was also the only bidder that had plans to invest US$400 million to upgrade and operate the Port Dickson refinery, contrasting with the other parties’ implied suggestions to shut down the refinery. Early reports indicated that Boustead lost out to the Philippine company because it did not show any interest in the refinery. In a filing with Bursa Malaysia, Bousted clarified that its bid covered all assets of ExxonMobil that were up for sale, including the Port Dickson refinery. The company also emphasized that there never was any intention to close down the refinery. The deal with San Miguel covers the acquisition of 175.5 million shares, equivalent to a 65% equity interest in Esso Malaysia from ExxonMobil International Holdings, Inc., a wholly owned subsidiary of ExxonMobil. San Miguel would pay Esso Malaysia US$206.02 million for the 65% block. The Philippine company will also pay US$403.97 million in cash for the acquisition of the entire stake in ExxonMobil’s EMMSB and EMBSB, both wholly owned units.