Mergers!!!

[PePe_LePew]

I'm sure you guys know about the mergers and acquisitions that's been going on around the world market, right? The AOL-Time Warner, the Glaxo-Smith, Vodafone-Vivendi... Could anyone tell me naman about the local ones if meron?

[batang uliran]

Equitable-PCIBank
BPI-Far East
upcoming:
Globe-Islacom

[Kamatayan]

Lucio Tan-BIR

[PePe_LePew]

Kamats: Hahaha... next thing you know we'll be paying our taxes to LT na. Heh :)

Hmm.. but seriously, interesting naman yung topic ah... mergers have been poping up left and right.. You guys have any idea where I can get these informations? Especially about the local industries?

[cianoy]

Solid Group and Destiny Cable

[Seele]

Talks between Globe and Bayantel have been revived. There are also talks between Globe and Digitel.

In the Southeast Asia realm, Singtel already gave a bid on Hong Kong Telecom. Just recently, last week, Pacific Century CyberWorks also placed a bid to acquire HKT. This is Asia's version of AOL-Time Warner. An internet company acquiring an established business. I'm wondering when this will happen in RP.

[batang uliran]

Where have you heard that the Globe-Bayantel talks have been revived? Islacom and Globe just announced their merger and while Bayantel-Globe makes sense, I'm not sure it will be happening anytime soon. As it is, Globe-Islacom already has 3 huge partners with equal stakes and it remains to be seen whether things will continue to run smoothly.

[PePe_LePew]

Bayantel-Globe??? I wasn't aware of such. All I've heard so far is the Globe-Islacom merger.
Hmmm... Maybe Globe will run better na sana with this acquisition. They've been giving crappy service so far as compared with Smart.

[Seele]

Talks between Globe & Bayantel are being "revived". Let's just say this is an insider info. Of course Globe-Islacom merging of operations has to be given much importance first as they are planning to complete the unification by yearend. However, this does not stop Globe from talking to other prospects. Eventually, as people speculated long ago, there will only be 3 telecom players in RP in the near future.

The foreign investors thing is also a big issue. Deutsche Telecom is indeed very keen in having a stronghold in Asia. SingTel on the other hand is also planning the same. I'm not really sure though how serious are the partners of Bayantel and Digitel are. Definitely DT and SingTel are bigger than these other foreign investors.

Just yesterday, PCCW won against SingTel on their bid for Cable & Wireless' subsidiary HKT. This leaves SingTel with some money to go into other ventures. However, this may also show how slow the growth potential of SingTel is as compared to Pacific Century Cyberworks which paid US$38 Billion to C&W for HKT.

Regarding Cable & Wireless, it has been the target of take over in Europe. This will again affect the RP telecom industry as C&W is Eastern's foreign partner. Just watchout. The telecom industry in RP will get more exciting.

I'm really looking forward to a young Pinoy Internet Company acquiring an old established company.

[This message has been edited by Seele (edited 02-29-2000).]

[Mikoid]

Isn't SingTel now working on a deal with Rupert Murdoch's News Corp, who also happens to be talking to Yahoo! ... ?

I thought Yahoo! was one of the last "pure" Internet companies around, but I guess the exigencies of the AOL-Time Warner deal is also forcing them to consolidate with a media partner.

[batang uliran]

Seele:

I am looking forward also to a time when a pinoy internet firm acquired a more established business. It has happened in the US, Europe and now HK. I am sure this is in the cards for the Philippines.

[KuyaDanny]

PePe_LePew, rather than aiming your sights at specific companies (which is a little hard to do since these things tend o be done in secrecy) you might want to look at particular industries first.

Here are some:

Banking - rationale: policy pronouncements by the Central Bank point to larger and fewer banks. So expect more mergers between banks. Candidates: Metro (owner is historically obsessed with being the biggest), Union (well-run, needs to get bigger to remain in the top ten), RCBC, Security.

Telecoms - rationale: capital-intensive businesses will always need deep pockets to survive. Look for companies with stable cash flow to merge with companies with big projects and commitments. Foreign investment is limited in these sectors, and generally hard to count on due to unfriendly political climate.

Media - rationale: the way we acquire information is changing. Old media (print, broadcast) is being surpassed by new media (online), yet old media is far superior in terms of content. Look for old and new to merge in many creative ways.

[zimdude]

I-Next + IPhil = PSINet Philippines

[Rorschach]

In my line of work, I deal a lot with all these companies that are merging. I hate it though, because my sales are dropping since they are more concerned right now with merging their data centers rather than operating them. Anyhow, KD did indeed give a good picture of the industries that are showing signs of mergers. Anyway, from my experience, here's some of the mergers...

BANKING: BPI-Far East, Equitable-PCI, Manila Bank-TA Bank-Omni Bank, Prudential Bank-Pilipinas Bank, Global Bank-Asian Bank, Urban Bank-Banco de Oro (just a rumor), Allied-PNB (same owner, but they won't merge), Metrobank doesn't need to merge anymore because they are so huge as it is. under their umbrella are banks such as Solidbank, PSBank, PhilBank, and even Global/Asia Bank.

INSURANCE: Ayala-FGU, 1st Nationwide-Eastern-Malayan, Pan Philippines-Metrobank-Phil. AXA Life

TELECOM: Globe-Islacom, Eastern Telecom and Bayantel are up for sale, but the biggies aren't really too interested. With Digitel, although a merger is possible, it is unlikely at this moment.

MEDIA: There's a lot of things going around in the Lopez group right now (ABS-CBN, Meralco, Adtel, Maynilad, Bepres, etc.) I'm at no liberty to say what exactly, but I hope they decide to buy my products. :)

[Rorschach]

Word from our Malaysian office is, their government is asking that the number of banks over there be reduced from 64 to around 15 only. WOW!!! If you're looking for mergers, turn your eyes in that direction. :)

[dzhon]

I think there is an ongoing "operational" merger between PLDT, SMART and PILTEL. up to what extent, I think an insider can enlighten us...

[Rorschach]

PLDT, Smart and Piltel are all part of the same group of companies. The only thing they're planning to merge right now would be their purchasing. Otherwise, they'll remain as separate companies.

A similar thing is happening in the San Miguel group right now. All the subsidiary companies have decided to merge their IT departments, forming SMITS (San Miguel IT Services).

[KuyaDanny]

For those of you who are interested in the subject of mergers, The Economist examines six recent mergers, one deal per week, starting with its 22 July 2000 issue.

Here is their introduction to the subject, taken from the table of contents:

"Corporate Mergers very often fail-more than half, it is estimated, destroy shareholder value, and fewer than one in six increase it. Yet mergers are once more all the rage. What are the lessons from this record of disappointment?"

[zimdude]

ABS-CBN, PLDT explore big telecom-media merger

http://www.inquirer.net/issues/nov2000/nov13/business/bus_main.htm


I'm most interested how this will affect the Internet industry and broadband ... PLDT DSL+Home Cable+Sky Cable...

[yuga]

... is this the one i see in the commercial??? - Fusion

[potato_babe]

Just to confirm what has been posted, i heard from some reliable source that PLDT and Bayantel is on the process of merging. The Lopez Group has given up on their phone line business.

[P] Also, PLDT is buying GMA. If I'm not mistaken it's already done. However, with the PLDT-Lopez Group merger, it somehow follows that GMA will be an ABS-CBN company already.

[P]That means Channel 2 will be the biggest TV network in the country.;)

[GORDON_FREEMAN_PHD]

I wonder why the Ayalas aren't scrambling in light of these developments. They seem to be reacting with typical old-economy swiftness.

[batang uliran]

I'm not sure what you mean. Bayantel has over a billion dollars in debt and is unlikely to make money ever. I doubt Ayala Corp would be interested in such a company especially since the future is wireless.

GMA-7 is more interesting and I think they looked into this and decided otherwise.

As the iAyala people on this site will attest, Ayala Corp has many internet and tech ventures cooking - many with overseas partners. They just choose to work on these things rather than follow the PhilWeb or iVantage strategy which is to do business through press releases.

Besides there is the Globe-Islacom merger slated to be completed soon which will give Globe much needed bandwidth.

[GORDON_FREEMAN_PHD]

BU -- I hate to play the devil's advocate here, but I think that a united PLDT/Smart/ABS-CBN front will walk all over whatever Ayala can push out the door in the new economy.

Some observations:
1. Smart is fast catching up with Globe in terms of wireless subscribers. And they are more open to third-party wireless developers than Globe, which is literally crushing people who want to develop wireless apps for the local market.
2. The presence of ABS-CBN means that they can push their new economy ventures (wireless or otherwise) to market that much quicker. Ayala does not have a media entity.
3. And the presence of Sonera Zed guarantees that this proposed super-group will have a wireless consumer play in the pot. Scary.

Besides, what new economy deals has iAyala cooked up? I've checked out the Web site and their investment arm has made deals outside the country that are pretty sure to be profitable. But these are investments outside the country for the sake of exit-related profit, not for the sake of strategic alliances that compete locally or even regionally.

Aside from that, they have a wireless group whose only claim to fame is GlobeChat. They have an e-commerce portal which probably gets less visitors in a month than PEx does in a day.

And Bayantrade? Their stake there is infinitesimal, and I'm sure you know that there is a lot of disillusionment with regard to B2B Exchanges anyway.

The only gem in the bucket is PinoyExchange. But clearly the emphasis of Ayala's new economy initiative is anything but this site. After all, BU, you folks are still running like a small business.

[GORDON_FREEMAN_PHD]

Pahabol: you folks are running like a small business with limited resources.

Oh, yeah. There's that MusicManila thing. I'm quaking in my boots now...

That being said, I do appreciate the fact that iAyala or its mother company does not resort to press-release tactics. There is a certain nobility for that, and this kind of professionalism really makes the Ayala group stand out from the rest in terms of moral high ground.

At the end of the day, I just hope that it's not because there's really nothing to show for it.

[batang uliran]

I agree with your observation that PEx has limited resources - how true and with the economy the way it is, getting funds has beeen getting harder, not easier. I wish we had the resources we need to give the site a bigger boost but until that happens, we'll keep trying.

ABS and PLDT together would certainly be formidable. Smart is catching up but at great cost - let's not forget that net income is still the name of the game and PLDT and Smart aren't that hot at the moment. Bayantel is a big bust. Ditto Sky Internet. Pinoycentral, despite having a hundred times the resources of Pinoyexchange is attracting about the same amount of traffic we are. I agree with you though that iAyala's B to C thrust, myayala.com leaves a lot to be desired. Their B to B business is likewise in its infancy.

iAyala's main initiatives are NOT on the website - many are still in the hush hush stage. Keep in mind that JAZA and Dado Banatao - the main cogs behind the company - were techies long before many of the PLDT/Smart/ABS crew. Besides, many of these initiatives are likely to NOT be Globe exclusive but open to all the wireless providers. There's also Integrated Microelectronics which is re-tooling for the new economy.

The bottom line is that it's too early in the game at this point to tell. The Ayala Group has always tried to keep three main cogs in their business group doing well - in the 21st century, these are banking, real estate and technology - as the third cog here develops, the other 2 hold firm and continue to bring in the money. A fourth cog is actually present and generating revenue at the moment - Food.

[Mikoid]

I agree with BU that ultimately, profits are the name of the game and it's too early to come up with a conclusion. The entities and investments in the Ayala Group (as well as its technology sector) create considerable monetary value for the mother unit. Who cares if it's an investment here or elsewhere, as long as profits are generated?

The companies in your proposed super-group, while looking good on paper, may not necessarily work well together. After all, there are a lot of little things that make a merger work -- it remains to be seen if these synergies can be made operational.

iAyala's wireless division also has some undisclosed projects in the pipeline, and they will make their splash soon enough.

As for your criticisms of iAyala's e-commerce play, well, this investment was made fairly early on. But you have to admit that an e-commerce presence makes great sense for a company that integrates thousands of merchants locally. And this is a step ahead of other mall owners/operators, that have yet to bring their offering online.

[zimdude]

But Purefoods is being offered to Hormel or Sanmiguel?

anyway let's see how PEx plays and translates community, eyeballs and market share building into revenue (let me revive the PEx, Inc. thread)

[GORDON_FREEMAN_PHD]

BU -- I have to admit that I am not too aware of the financial positions of the proposed merger companies. The union makes sense in a strategic sense, but as with all mergers, the financial implications are quite important.

I am still a bit wary of Ayala's new economy position. I suppose it's a wait-and-see proposition.

[zimdude]

If PLDT and GMA-7 is coming to a close - supposedly for PLDT to have content for their broadband strategy - how will affect the Telecom, Internet and Broadcast industries?

[zimdude]

Infocom buys out Davao's Gatesway Online
By Hernani P. de Leon
BusinessWorld Mindanao Bureau Chief

DAVAO CITY -- Infocom Technologies, Inc. has formally taken over the operation of Gatesway Online, Inc., a leading Internet service provider (ISP) in this city. A formal announcement on this development was sent to subscribers yesterday morning by Gatesway president Regina de Leon.

(Full article) (http://www.itmatters.com.ph/news/news_09272001b.html)

[zimdude]

PLDT defers plan to buy GMA-7
Posted: 7:36 PM (Manila Time) | November 06, 2001
By Abigail L. Ho
Inquirer News Service

TELECOMMUNICATIONS giant Philippine Long Distance Telephone Co. (PLDT) said Tuesday it was postponing buying into GMA Network Inc. indefinitely because of debt problems and the difficult business environment.

While announcing a four-fold jump in net profit for the first nine months,
PLDT said it had put off a plan to acquire a stake in GMA "as the company focuses on its core business and debt-related matters, given the uncertain economic climate."

The rest of the article at INQ7 (http://www.inq7.net/bus/2001/nov/07/bus_5-1.htm)

[tr|n|ty]

Hewletts blast Compaq deal
(http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?GXHC_gx_session_id_FutureTenseContentServer=21ff6b94e7f62ec6&pagename=FutureTense/Apps/Xcelerate/View&c=TDDArticle&cid=TDDUWADRPTC&live=true)

Hewlett-Packard Co. and Compaq Computer Corp. vow to press on with their merger despite an announcement Nov. 6 from the family of HP co-founder William R. Hewlett that it will vote against the proposed deal.



Broadview International may sell the shop (http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=FutureTense/Apps/Xcelerate/View&c=TDDArticle&cid=TDDP0CDRPTC&live=true)

Hit by a major slowdown in technology M&A, boutique advisory firm Broadview International llc is hunting for a buyer, according to sources.

Fort Lee, N.J.-based Broadview has hired New York investment bank Lazard to help sell the company, the sources said. Potential buyers could include large foreign banks eager to build an M&A advisory presence in the U.S., such as UBS Warburg, the investment banking arm of Swiss banking giant UBS AG, Deutsche Banc Alex. Brown, France's Rothschild et Cie and French-owned SG Cowen & Co.