Lucio Tan creates holding firm for business empire

ABS-CBN News

Posted at Jul 31 2012 05:37 PM | Updated as of Aug 01 2012 06:55 PM

MANILA, Philippines (UPDATE) - Lucio Tan, the country's second richest man according to Forbes magazine, is consolidating his diverse business interests under one company.

In a disclosure to the stock exchange late Tuesday, Tanduay Holdings said its board of directors approved the move to change its name to LT Group Inc.

The LT Group will consolidate Tan's interests in seven firms, namely Asia Brewery Inc., Fortune Tobacco Corp. (FTC), Eton Properties Philippines, Philippine Airlines, Air Philippines Corp., Philippine National Bank and Allied Banking Corp.

The move effectively consolidates all of Tan's investments under one listed company, and transforms Tanduay into a diversified conglomerate with interests in tobacco, real estate, liquor, beverage, banking and airlines.

"The Board of Directors believes the enlarged portfolio will provide the Corporation with significant opportunities for synergies and business growth, including but not limited to synergies in marketing and distribution, enhanced flexibility in funding, as well as improved financial profile, all of which, the Board believes, will contribute to enhance shareholder value," it said, in the disclosure.

Jose Mari Lacson, head of research at Campos, Lanuza & Co. said, the move was somewhat of a "surprise."

"I'm a bit surprised. It has never happened before. It's a major change because to be listed means declaring their annual performance, submitting yourself to scrutiny by regulators. They have reached a certain maturity at the corporate level, showing they're ready to play ball," he told ABS-CBNnews.com

Lacson said the decision to consolidate Tan's companies under one conglomerate could be part of the 78-year-old tycoon's estate planning.

"What is happening here could be part of Tan's estate planning. He has been reoganizing his companies... In part, listing a company would make it easier to split the ownership of a company," he said.

In the disclosure, LT Group will use the proceeds from a P5 billion investment of Tangent Holdings Corp. to finance the investments in the 7 firms.

LT Group will acquire at least 90% of Asia Brewery, a non-listed company that manufactures and sells alcoholic and non-alcoholic beverages such as Colt 45, Manila Beer and Tanduay Ice.

The company will also 83% acquire FTC through cash subscription of 1.64 billion shares at par value of P1 per share. FTC, a non-listed company, opwns 49.6% of Philip Morris Fortune Tobacco Inc., which manufactures and distributes Philip Morris, Marlboro and Hope.

The Tan group's 98.1% holdings in property developer Eton; 49.84% holdings in PAL; 50.97% holdings in AirPhil will also be transferred to the LT Group. The company will also get Tan's 34.79% stake in PNB and 27.62% stake in Allied Bank.

A special stockholders' meeting will be held on September 18.