Oil giant ExxonMobil Corporation (XOM) has entered into an asset sale agreement with Philippine conglomerate San Miguel Corporation (“SMC”). Per the deal terms, ExxonMobil will offload its stakes in three businesses operating in the Malaysian downstream petroleum sector for a total consideration of $610 million. The sale will facilitate the U.S.-based ExxonMobil to focus on its Malaysian upstream business, chemicals, lubricants and global business support
The deal, which is subject to the customary closing conditions, is expected to be completed in the first half of 2012.
The assets to be divested comprise ExxonMobil’s entire 65% stake in the publicly traded company Esso Malaysia Berhad (“EMB”) for $206 million (or 3.50 ringgit per share), plus its wholly owned ExxonMobil Malaysia Sdn Bhd (“EMMSB”) and ExxonMobil Borneo Sdn Bhd (“EMBSB”) subsidiaries.
These units are involved in refining, distribution and marketing of petroleum products in Malaysia, comprising assets such as the Port Dickson refinery on the west coast of Malaysia (with a daily processing capacity of 88,000 barrels of crude), seven fuel distribution terminals and approximately 560 branded service stations.
The acquisition is expected to help San Miguel to diversify its business and seek opportunities in the oil sector through its first purchase of oil assets. San Miguel Corporation is a Philippines business conglomerate and also controls Petron Corp., the largest oil refining & marketing company in the country.
For ExxonMobil, the disinvestment will have no impact on its Malaysian upstream operations, where it will continue with petroleum and natural gas exploration and production through its associate. The transaction also excludes marketing and sales of chemicals, lubricants, and asphalt products, and operations of the ExxonMobil Kuala Lumpur Business Support Center.
Irving, Texas-based ExxonMobil Corporation is the world’s largest publicly traded oil company, engaged in exploration and production of oil and natural gas, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses. Approximately 84% of ExxonMobil’s earnings come from its operations outside the U.S.
ExxonMobil holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we remain Neutral on the company.
ExxonMobil faces tough competition from Chevron Corporation (CVX) and ConocoPhillips (COP).
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