San Miguel Corp. may walk away from a 12.2 billion-peso ($297 million) agreement to sell its majority stake in Bank of Commerce to CIMB Group Holdings Bhd.
San Miguel, the Philippines’ largest company, confirmed in a stock exchange filing President Ramon Ang’s comments that he would know in about a week whether to proceed with or scrap the CIMB deal. The Philippine Daily Inquirer published Ang’s comments yesterday and reported that Philippine laws restricting foreign ownership of real estate have become a stumbling block, citing unidentified sources.
“It would be a lost opportunity for both CIMB and San Miguel,” Astro del Castillo, managing director of First Grade Holdings Inc., said an interview today. Sale proceeds would have helped San Miguel expand into other ventures, while CIMB would gain a foothold in the Philippines, del Castillo said.
CIMB in May 2012 agreed to buy a 60 percent stake in Bank of Commerce from San Miguel and other shareholders, helping the Kuala Lumpur-based bank expand its Southeast Asia footprint. The delay is being caused by CIMB’s lack of legal capability to absorb Bank of Commerce’s real estate operations and has nothing to do with valuation or asset quality, according to the report.
CIMB didn’t immediately respond to an e-mail seeking comment today. The deal is in its final stages, Ang was quoted as saying. If it collapses, he will run the bank and increase its capital by $2 billion, he said. The comments were confirmed in San Miguel’s statement today.
The stake sale helps San Miguel exit the banking business and would bolster its growth beyond traditional food and drinks. The Manila-based company has expanded into airlines, oil and electricity and is in talks to invest in an energy venture through a $5 billion equity investment, Ang said on May 10.