Asian titans clash over Salim's First Pacific deal<\/p>\n
Elaine Kurtenbach, Associated Press, Hong Kong<\/p>\n
An attempt by Indonesia's powerful Salim group to sell its
\nstake in troubled Philippine Long Distance Telephone Co. to
\nPhilippine tycoon John Gokongwei has set off a managerial fracas
\nthat stretches from Jakarta all the way to Tokyo.<\/p>\n
Hong Kong-based and listed First Pacific Co., which is
\ncontrolled by the Salims, announced last week that it planned to
\nsell the company's 24.4 percent holding in PLDT, the Philippines'
\nlargest phone carrier, to Gokongwei in a transaction worth US$925
\nmillion.<\/p>\n
The deal would set up a joint venture to handle First
\nPacific's stake in PLDT and a 50.4 percent stake in a Philippine
\nproperty developer, Bonifacio Land Corp. Gokongwei's group would
\nhold a two-thirds stake.<\/p>\n
First Pacific's executive chairman, Manuel Pangilinan, a one-
\ntime protege of the Salims, opposes the deal and is reportedly
\nattempting to pull together a counteroffer.<\/p>\n
While conflicts between controlling shareholders and
\nmanagement are common fare in Western boardrooms, they have been
\nrelatively rare in the family-dominated Asian business world.<\/p>\n
"In Western markets it is not at all unusual for the
\nmanagement of a subsidiary to want to stage a buyout in those
\ncircumstances. But management buyouts are quite unusual in Asia
\nbecause most companies are under family control," said David
\nWebb, editor of Webb-site.com, which provides independent
\ncommentary on local business affairs.<\/p>\n
The Salims recruited Pangilinan, a Wharton School-educated
\nFilipino, and put him in charge of building up First Pacific into
\nan international, Western-style investment empire back in the
\n1980s. But in recent years, the venture has been weighed down by
\nits unprofitable holdings in the Philippines.<\/p>\n
Once Indonesia's largest conglomerate, the powerful Salim
\ngroup ceded more than 100 companies to the state after its Bank
\nCentral Asia crashed in the Asian financial crisis of the late
\n1990s. Since then, the group has kept a low profile, though it is
\nwidely thought to be using other companies to buy back its
\nassets.<\/p>\n
As president and chief executive of PLDT, Pangilinan has been
\ntrying to restructure the company as a mobile phone player. In
\nhis bid to prevent Gokongwei from taking control, he has turned
\nfor support to PLDT's chairman, Antonio Cojuangco, scion of a
\nrival Philippine business empire.<\/p>\n
PLDT executives did not return phone calls Friday.<\/p>\n
A First Pacific spokeswoman in Hong Kong, Sara Cheung, denied
\nthat the deal with Gokongwei was in trouble and said further
\ndiscussions were planned for later in the month. Pangilinan's
\nposition in the company remains unchanged, she said.<\/p>\n
Still, First Pacific announced it was curtailing Pangilinan's
\naccess to confidential information regarding the deal due to
\n"potential conflicts of interest."<\/p>\n
Lively speculation in the Philippine media, as well as a
\nprotest against Gokongwei's bid by several hundred PLDT workers
\nduring the company's annual general meeting this week have helped
\nto dramatize Pangilinan's situation.<\/p>\n
Ultimately, the deal between the Salims and Gokongwei can only
\ngo through if yet another key player, Japanese telecoms giant
\nNippon Telegraph and Telephone Corp., does not exercise its own
\nright to bid for PLDT as No. 2 shareholder, with a 15 percent
\nstake.<\/p>\n
NTT president said Junichiro Miyazu told reporters in Tokyo
\nthis week that his company was still undecided and was
\nconsidering "all possible options" regarding the proposed deal.<\/p>\n
Pangilinan and Cojuangco would have to at least match
\nGokongwei's bid - PLDT faces more than $1 billion in debt
\nobligations due from this year until 2004.<\/p>\n
"Ultimately, Pangilinan is not a controlling shareholder. In
\nthese situations, it's the controlling shareholder who wins,"
\nWebb said.<\/p>",
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