MANILA, Philippines - San Miguel Corp. has exercised a share option allowing it to gain majority control of the country's largest oil refiner Petron Corp.
The deal is part of San Miguel's plan to raise its holdings in Petron to up to 90%, with the group looking to invest at least $2 billion in the oil refiner, which it considers undervalued, within the next 3 years.
San Miguel said in a statement it acquired 60% of SEA Refinery Corp., which partly owns Petron, allowing it to raise its holdings in the oil firm to 68%.
Last week, San Miguel President Ramon Ang told reporters the group held 38% of Petron and was keen to further increase its stake.
Financial details of the transaction were not provided. As of end September, SEA Refinery held 50% of Petron, based on regulatory filings.
After the announcement, Petron shares slipped as much as 1.6%. It hit a record high of P14.5 on Wednesday and has more than doubled this year.
San Miguel fell as much as 2.2% in a broader market that was down 0.9% on Thursday.
In August, San Miguel said it had bought 1.52 million shares in Petron for P10.9 billion ($248 million) from SEA Refinery Holdings B.V., a unit of British investment firm Ashmore Group. SEA Refinery Holdings owns SEA Refinery Corp.
San Miguel -- which dominated the local food and drinks market for decades before diversifying into power, oil refinery, infrastructure, telecoms, and mining -- forged an agreement with SEA Refinery Holdings B.V. in December 2008 giving it two years to exercise an option to buy into Petron.
The option expired on Wednesday, Dec. 15.
In 2008, the Ashmore Group bought 40% of Petron from state-owned Philippine National Oil Co. for around $544 million, raising its stake in the oil refiner to 90.6%.
Petron, with a market value of $3 billion, has a public float of 7.5%, below the 10% minimum required by the Philippine bourse.
Ang has said San Miguel and its listed units, including Petron, were considering hiking public ownership to comply with the bourse's minimum public float rule and take advantage of the strong investor appetite for equities investments.