| SMC buys Exxon’s Malaysia units, Esso acquisition estimated to cost $600M OVERSEAS EXPANSION. San Miguel Corp., now an energy-based conglomerate, is expanding overseas outside of its traditional business, buying a controlling stake in at least three Malaysian subsidiaries of Exxon Mobil involved in oil refining and distribution. Diversifying San Miguel Corp. has expanded its footprint in the regional oil industry with an agreement to acquire the downstream petroleum businesses of American multinational oil and gas company Exxon Mobil Corp. for about $600 million. Industry sources privy to the transaction said SMC had finalized a deal to buy a controlling stake in at least three Malaysian subsidiaries of Exxon Mobil involved in oil refining and distribution. The purchase was concluded following a bidding process that had taken place in the last two months. It is a deal seen directly benefiting SMC’s oil refining unit Petron Corp. as Exxon, through subsidiary Esso Malaysia Berhad, has a refinery in Port Dickson that processes an average of 45,000 barrels of crude oil per day. It also manages a major portion of ExxonMobil’s network of 560 Esso and Mobil service stations in Malaysia. Exxon Mobil is the parent company of Esso and Mobil Malaysia and also owns a 65-percent stake in Esso Malaysia Bhd which is listed on the Bursa Malaysia. “It gives SMC a bigger retail footprint in the region,” one source said, adding that San Miguel was also attracted to Esso because of the high grade and capability of its oil refining plant. Although Malaysia itself has a population equivalent to only about a third of the Philippines’ 100 million people, the retail market in Malaysia consumes much more than in the Philippines, the source explained. Petron earlier announced a $1.8-billion (roughly P81-billion) investment to further upgrade its 180,000-barrel-a-day oil refinery. This Refinery Expansion Project (RMP-2) to be completed in 2014 was cited as a strategic project not only for the oil company but also for the whole country because it would help lessen the Philippines’ dependence on fuel imports. The project is also seen insulating the country from potential supply disruptions, given the turmoil now affecting some major oil-producing countries in the Middle East and North Africa. With this deal, Malaysia will thus be a key market to Petron’s RMP-2 project. “It will add to the market that Petron can serve once its refinery upgrade is finished,” the source said. Petron is the biggest oil refiner and retailer in the Philippines. It won’t be SMC’s first time to set up shop in Malaysia as the conglomerate has presence in the packaging business. However, it’s the first time that SMC—which has transformed itself from a food and beverage—to an energy-based conglomerate—is expanding overseas outside of its traditional business. |
| Most U.S. Stocks Retreat Amid Dell’s Decline, Comments From Fed Officials Most U.S. stocks declined, wiping out an earlier advance, as Dell Inc. (DELL) forecast weaker sales and two Federal Reserve officials expressed concern about the amount of stimulus being applied to the economy. Dell fell 10 percent as slower spending on PCs and consumer technology crimped its sales forecast. Abercrombie & Fitch Co. (ANF), the teen-clothing retailer, slid 8.7 percent as executives said cost pressure will rise. Standard & Poor’s 500 Index companies that are least-tied to the economy, including phone and utility providers, rose at least 0.8 percent as a group. Eastman Kodak Co. (EK) surged 26 percent as analysts and investors told Bloomberg News its patents may make it a takeover target. About 18 stocks fell for every 17 that rose on U.S. exchanges. The S&P 500 added 0.1 percent to 1,193.89 at 4 p.m. in New York, after gaining 1.3 percent at most and dropping as much as 0.7 percent. The Dow Jones Industrial Average climbed 4.28 points, or less than 0.1 percent, to 11,410.21 today. “People started to reevaluate the odds of a QE3,” James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $340 billion, said in a telephone interview. “There are a lot of people that have been saying we’re going to get a QE3” and comments from Fed policy makers may have reduced those odds, he said, using the nickname for a potential third round of quantitative easing. The S&P 500 rose as much as 28 percent after Fed Chairman Ben S. Bernanke foreshadowed on Aug. 27 of last year a second- round of so-called quantitative easing. The index has fallen 12 percent from a three-year high on April 29 on concern about Europe’s debt crisis and an economic slowdown. The Fed finished its second round of asset purchases at the end of June. Fed Speculation Earlier gains in stocks were propelled by better-than- estimated earnings at companies including Target Corp. (TGT) and Staples Inc. (SPLS) Stocks reversed earlier gains on investors’ speculation that the Fed may not consider another economic stimulus program to avert a recession. Bernanke’s pledge last week to keep interest rates near zero percent until mid-2013 was “inappropriate policy at an inappropriate time,” Charles Plosser, president of the Fed Bank of Philadelphia, said today in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. Dallas President Richard Fisher said the central bank shouldn’t enact policy to protect stock investors. Both officials dissented from the Fed’s Aug. 9 statement. Wholesale Costs Stock-index futures maintained gains today after a report showed that wholesale costs in the U.S. rose more than forecast in July. The 0.2 percent advance in the producer prices index followed a 0.4 percent drop in June, Labor Department figures showed. Economists forecast a 0.1 increase, according to the median estimate in a Bloomberg News Survey. The so-called core measure, which excludes volatile food and energy, climbed 0.4 percent, the most since January. The report showed the cost of crude goods dropped in July for a third consecutive month, led by declining petroleum and food prices. Slowing sales and the drop in raw-materials mean companies will be less likely to raise prices, which may give Federal Reserve policy makers more room to act to spur growth after the world’s largest economy almost stalled. Inflation data suggest “Fed policy makers are unlikely to rush to further easing,” Michael S. Hanson, economist at Bank of America Merrill Lynch in New York, wrote in a note today. “But with the economy remaining muddled on a slow growth and high unemployment path, a dovish bias is likely to remain for now.” Technology Shares Slump Technology companies in the S&P 500 fell 0.9 percent, the most within 10 industries. Dell slumped 10 percent to $14.20. Lackluster demand from consumers and market-share gains by Apple Inc. weighed on results, offsetting stronger corporate orders for server computers. Abercrombie & Fitch declined 8.7 percent to $64.87. Pressure from increasing commodity costs will be greater in the second half, Chief Executive Officer Michael Jeffries told investors on a conference call. Earlier today, the New Albany, Ohio-based company reported that second-quarter sales rose 23 percent on U.S. back-to-school purchases and gains in Europe. Target rose 2.4 percent to $50.55. The second-largest U.S. discount retailer posted second-quarter profit that surpassed analysts’ estimates as cost reductions helped offset sales of lower-margin goods. Store Openings Chief Executive Officer Gregg Steinhafel has slowed store openings during the past two years and pursued sales growth by adding grocery sections and offering discounts on items purchased with a store-issued debit or credit card. Those initiatives helped same-store sales in the quarter rise 3.9 percent, the most since 2007. Staples added 0.5 percent to $14.29. The office-supply retailer said its second-quarter earnings minus some items were 22 cents a share, beating the average analyst estimate of 19 cents a share. Per-share earnings increased 17 percent among the S&P 500 companies that have released quarterly results since July 11, according to data compiled by Bloomberg. About three-quarters of the companies have topped the average analyst profit forecast, the data show. Eastman Kodak surged 26 percent to $2.69. The 131-year-old camera company may hold patents worth five times more than the business itself, making it a takeover target, investors and analysts told Bloomberg News. The digital-imaging patents owned by Kodak may now be worth $3 billion in a sale, MDB Capital Group said. |
| Oil Declines in New York; U.S. Crude Inventories Show Unexpected Increase Oil dropped from a two-day high in New York as investors speculated that increasing crude stockpiles in the U.S. indicate weaker fuel demand in the world’s biggest consumer of the commodity. Futures slid as much as 0.3 percent today. Crude supplies climbed 4.23 million barrels last week, an Energy Department report showed. They were forecast to fall 500,000 barrels, according to a Bloomberg News survey of analysts. Most U.S. stocks declined as two Federal Reserve officials warned against applying too much stimulus to the economy. Crude for September delivery dropped as much as 28 cents to $87.30 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.36 at 9 a.m. Sydney time. The contract yesterday rose 93 cents to $87.58, the highest since Aug. 15. Prices are 16 percent higher the past year. Brent oil for October settlement climbed $1.47, or 1.4 percent, to end the session at $110.60 a barrel on the London- based ICE Futures Europe exchange yesterday. U.S. crude inventories climbed to 354 million in the week ended Aug. 12, according to the Energy Department report. The nation’s Strategic Petroleum Reserve is releasing stockpiles in coordination with the Paris-based International Energy Agency. The Energy Department has delivered 20.4 million barrels of oil from emergency reserves since July 17, according to its website. The government sold 30.64 million barrels to companies in cooperation with the IEA. Inventories at Cushing, Oklahoma, the delivery point for the New York contract, declined 893,000 barrels to 33.7 million, the lowest level since November, the Energy Department report showed. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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Jonathan Ravelas
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Rhys Cruz
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