Salim's firm takes control of PLDT for $750 million

Salim's firm takes control of PLDT for $750 million

MANILA (Bloomberg): First Pacific Co., a Hong Kong company owned by Indonesia's biggest business group, paid $750 million to take control of Philippine Long Distance Telephone Co., locking up three-quarters of the nation's telecommunications market.

The purchase, which took three months to complete, is one of the biggest regional acquisitions by an Asian company since economies slid into recession last year. Its architect, Manuel Pangilinan, was named president of PLDT, replacing Antonio Cojuangco, whose family controlled the company for three decades.

The nation's largest-ever corporate takeover represents a major bet by First Pacific on the Philippines, whose economy is expected to have officially slid into recession during the third quarter. First Pacific, a unit of Indonesia's Salim Group, will now have about four-fifths of its assets in the Philippines, where Pangilinan was born.

"It's done," PLDT board member Antonio Meer said in an interview. "They have taken over control."

The partnership between First Pacific and the 70-year-old phone company will create a telecommunications behemoth with 2.7 million subscribers to its fixed line and cellular services. ING Barings served as sole advisor to First Pacific in the transaction.

First Pacific paid 30 billion pesos for a 17.2 percent stake in the company, equivalent to 1,420 pesos per share.

That's a 31 percent premium to Monday's closing price, in line with expectations.

It holds 5.9 percent directly and an additional 11.3 percent through a majority stake in Philippine Telecommunications Investment Corp., giving it control over 27.4 percent of PLDT's shares.

PLDT shares fell 30 pesos to 1,055. First Pacific shares were suspended in Hong Kong.

Pangilinan called the acquisition a "milestone" in First Pacific's transformation from a diversified conglomerate into a company with interests in select Asian companies. In Hong Kong, First Pacific owns First Pacific Bank and First Pacific Davies, a real estate concern.

"While we do not see the region's harsh economic conditions lifting any time soon, we believe the timing is right for those with a long-term perspective to begin the process of re- investing," he said.

First Pacific used cash raised through sales of businesses earlier this year, including a one-time profit of $634 million from the sale of Hagemeyer, a Dutch car and appliance maker.

Still, First Pacific's increasing exposure to the Philippines has raised some eyebrows back in Hong Kong. First Pacific also controls the largest property project in the Philippines.

First Pacific controls Smart Communications Inc., the Philippines' largest provider of mobile-phone services with 770,000 subscribers. PLDT has 1.7 million land lines throughout the 7,000-island archipelago and owns a majority of Pilipino Telephone Corp., the second-largest cellular phone company.

Pangilinan said Smart will folded into PLDT in exchange for new shares of the phone company. Before that happens, Nippon Telegraph & Telephone Corp. has agreed to increase its stake in Smart to 40 percent from 15 percent, he said.