Half of PHBs eye acquisitions

By Louise M. Francisco, Research Staff

In the next three years, 50 percent of local privately held businesses (PHBs) plan to grow operations through acquisitions despite the turmoil in financial markets worldwide, according to the recent International Business Report (IBR).

The report was produced by Grant Thornton International and released by its member accounting, tax and business advisory firm Punongbayan & Araullo (P&A).

Among the PHBs that hope to do such strategy are business leaders who expect cross-border acquisitions (at 63 percent optimistic level); those who assume acquisitions in the local market are at 25 percent.

“This is a very positive indication that Philippine businesses are now ready to compete in the global acquisitions of businesses and expand their operations offshore,” declared P&A’s Transaction Advisory Services head Francis Albalate in a statement.

Cited as examples of aggressive moves of PHBs were IPVG’s IP Contact Center Outsourcing Inc.’s (IPCCO) stock-purchase agreement with US-based contact center Influent or Interactive Teleservices Corp. to acquire 70 percent of the call center for $14 million in last week of March; the successful acquisitions of Asian Spirit and Southeast Asian Airlines (Seair) by juice king Alfredo Yao; and the announcement of beauty and personal-care product manufacturer Splash Corp. of plans to acquire two local brands within the year to strengthen its position in the health-and-wellness market.

“PHBs see domestic and international M&A [mergers and acquisition] as a key strategic tool to drive growth. It’s one means of progressing up the value chain through the acquisition of brands,” explained Greg Navarro, P&A managing partner and CEO.

Cited as yet another indication of aggressiveness and willingness to compete is the Bangko Sentral ng Pilipinas’ (BSP) appeal to the banking industry to also consider mergers among smaller-sized banks and establish more financially stable banks besides the recently merged Banco de Oro-EPCI Inc., now the country’s second-largest bank by total assets.

The paper said 22 percent of Filipino business leaders who were surveyed expect their businesses to undergo a public listing in the same acquisition span of three years.

Companies such as San Miguel Brewery Inc. and Viva Communications Inc. had their applications for listing on the Philippine Stock Exchange soon approved this year.

“Public listings, of course, have been adversely affected by the bearish stock market since the subprime collapse,” explained Navarro.

“However, several IPO plans are still a go, albeit in a wait-and-see status,” he said.

(As published on the front page of BusinessMirror, 2-3 May 2008. Articles about this particular IBR result have also been published in BusinessWorld, 1 May 2008; The Daily Tribune, 1 May 2008; The Philippine Star, 2 May 2008; and the Manila Bulletin, 2 May 2008.)