There seems to be an undeclared war of the corporate giants. It is the race to create the Philippines’ mega conglomerate—the largest company in terms of scale and diversity of operations, combined sales and profits of its operating units or divisions, geographic reach, locally and globally; employment of manpower, technology and resources, and visioning for its businesses during the balance of the 21st century.At the starting gate are three major groups—San Miguel Corp. under Chairman and CEO Eduardo Cojuangco Jr. and President and Chief Operating Officer Ramon Ang, Ayala Corp. under the brothers, Chairman and CEO Jaime Augusto Zobel de Ayala and President and COO Fernando Zobel de Ayala, and Manuel Pangilinan of the First Pacific Group of Hong Kong of the Salim Group of Indonesia. First Pacific, in turn, has controlling interest in two large Philippine companies—the Philippine Long Distance Telephone Co. (PLDT) and Metro Pacific Investments Corp.
Not to be ignored are three other large conglomerates, Henry Sy Sr. of the giant retailing chain SM and banking’s No. 1 Banco de Oro, George SK Ty of the Metrobank Group and Toyota, and Lucio Tan of PNB and Allied Bank, Philippine Airlines, Fortune Tobacco and Foremost Farms.
Two major developments triggered the Battle of the Corporate Goliaths. One is the US financial meltdown, which has spiked recession in two-thirds of the world and at the same time, created vast opportunities for mergers and acquisitions following the sharp declines in asset values.
The other is the massive expansion, almost overnight, of the San Miguel Group which has spurred a reaction from its rivals and would-be rivals, notably the Ayala Group of the venerable Ayala family and the First Pacific Group of Pangilinan and Antoni Salim.
It is a game of dominance and the stakes are high. They include control of major businesses in the Philippines, such as manufacturing, telephony, energy (from production, distribution, and supply and marketing of allied services and products), real estate, banking, water resources and the employment of and future of technology in these fields.
The race winner will determine how products and services will be produced, packaged and marketed and define the market and needs of the future.
San Miguel acquired significant stakes in Meralco and Petron and immediately, Ayala Corp. headman Jaime Augusto Zobel de Ayala recalled his top generals CEOs from Ayala Land Inc. and Globe Telecoms to headquarters to think of strategies and major acquisitions. The Ayala Group has piled up $500 million in investible funds to deploy.
For his part, Manny V. Pangi-linan has bought 10 percent of Meralco to observe how the San Miguel group will operate in the electricity distribution monopoly. MVP can provide a second opinion to Ramon Ang’s innovative ideas.
San Miguel has been acquiring all kinds of telephone technology—landline, wireless and broadband.
Becoming integral to wireless technology is global positioning system technology, knowing the location of your subscribers and customers, where and when they go to which particular place—at home, in the office, at the shopping mall, parking lot or car repair shop, coffee shop or restaurant, or in the neighborhood.
Crunching such mobile data and sensing consumer patterns will give a distinct advantage to a consumer product company like San Miguel in deploying its products and services. Wireless technology is also giving rise to technology platforms that deliver vital services, like health care, a field in which telco taipan Manuel Pangilinan has been investing heavily. Pacemakers and vital health signs can now be monitored wirelessly, thanks to mobile phone technology.
This early, San Miguel Corp. is studying how to pipe broadband data to the electrical outlets fed with electricity by Meralco, a recent acquisition, using the technology of Qtel, a recent partner. Pangilinan already uses Meralco posts to string PLDT’s landlines into households.
San Miguel, Ayala and Pangi-linan will fight it out in the next battleground—water, for which a major shortage is emerging.
On still another front, the winner and the major players in the race for No. 1 will have a say in the selection of the country’s leaders and the future and direction of the economy which has become middle class with per capita GNP income of more than $2,000.
So far, San Miguel has gained the upperhand. San Miguel Corp. has acquired 27 percent direct equity in Meralco plus another 10-percent owned by groups friendly to San Miguel Corp. for a total of 37 percent. San Miguel Corp. also has an option to buy 50.1 percent of Petron Corp., the country’s largest oil refining and marketing company.
E-mail Tony Lopez at biznewsasia@gmail.com
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