It was once a sprawling business empire that was, at one point, the biggest and most powerful in the country.
For instance, there’s the Lopezes’ Meralco, a power distributor with a franchise area covering as much as 60 percent of the whole country; Maynilad, a water utility company in charge of the entire western half of the capital region; a tollway connecting Manila to Northern Luzon; a trailblazing newspaper, The Manila Chronicle; 25 radio and TV stations; a pioneering fixed-line telecommunications service (remember Bayantel?) and many, many more companies here and there, all previously owned by the Lopezes.
War chest
It was quite literally a sweet success story that started with sugar.
The Lopez brothers of Iloilo, Eugenio and Fernando, parlayed their family’s 3,700-acre sugar plantation on Negros Island into one of the Philippines’ biggest business empires, according to a Sept. 7, 1962 Time magazine article. Thus, from the so-called sugar wealth, emerged a bigger and more formidable business conglomerate.
The 1950s to early 1970s became the Lopez family’s golden age – with three mammoth businesses, Meralco, ABS-CBN Corp. and Meralco Securities Corp., the holding company that later became the forerunner to First Philippine Holdings Corp.
But martial law, wrong political bets that affected their regulated businesses, bad debts incurred in the post-Marcos Sr. era, a string of bad acquisitions, mismanagement and younger generations who lived – and continue to do so – like royalty, all resulted in the troubles of the once-upon-a-time formidable empire.
In short, the Lopez Group became a victim of its own success.
But through the ups and downs, Don Eugenio’s children – Eugenio ‘Geny’ Lopez Jr., Oscar Lopez, Presentacion Lopez-Psinakis, Manuel ‘Manolo’ Lopez and Roberto Lopez – tried to resolve the challenges quietly and within the family.
Third generation
But the second generation in Don Eugenio’s blood line has passed and the peaceful co-existence seems to have died with them.
It’s now the third generation cousins who are in charge and we’re now seeing how this is turning out to be – an ugly public fight against their cousin Federico ‘Piki’ Lopez.
On Monday, each of the three branches of the Lopez majority (71 percent) got together to collectively issue a public statement, stressing that they have lost trust and confidence in their cousin Piki.
‘Good corporate governance requires transparency and timely disclosures on decisions that have a material financial and strategic impact on the Lopez group. Piki did not afford us such.
‘We were neither informed nor consulted about the P50-billion sale of 60 percent of First Gen’s natural gas business to Prime Infrastructure last November. Again, the same happened this April, when First Gen acquired a 33 percent stake in Prime’s hydropower business for P62 billion.
‘Excluding us from such significant decisions was a clear failure in Piki’s fiduciary responsibility and a circumvention of corporate governance.
‘If that were not enough, we discovered embedded in these deals, not one, but two poison pills. If Piki and his designates are removed from their management roles, First Gen will pay Prime P24 billion and allow Prime to buy out First Gen from the gas and hydropower deals at a 25 percent discount.
‘Through the poison pills, Piki secured his position as chairman and CEO and secured management control of the company, effectively making him indispensable because the cost of removing him, even for non-performance, would be too great.
‘Piki’s fiduciary duty mandated him to place the interests of the beneficial owners above his own, ensuring he did not use his position for personal gain. This was not the case. Piki’s interests superseded those of his shareholders.
‘It was only ethical that Piki should not have asked for or accepted the poison pill without consulting the majority shareholders,’ the majority said.
The statement was signed by 12 third generation Lopez members: Gabby Lopez, together with his siblings and cousins Maria Cristina Rosario Lopez Grassi, Roberta Pilar Lopez Feliciano, Maria Margarita Lopez Lichauco, Maria Eugenia Psinakis Brown, Rafael Lopez, Ernesto Miguel Lopez, Manuel Lopez Jr., Ramon Javier Lopez, Miguel Lopez, Michael Lopez Psinakis and Martin Lopez.
The way I see it, the third generation’s troubles stem from the reality that under their leadership, the business became parochial – divided into fiefdoms without much care for anything outside their respective territories.
Piki, for instance, must have had no choice but to align with tycoon Enrique Razon, now the country’s richest man, who is known for his agility and astuteness, regardless of the shifting political tides.
And why did he need an ally? Because First Gen has not been able to secure long-term contracts for its gas output – or at least not in the way it used to before, which were quite advantageous to the Lopezes.
Razon, as the new owner of Malampaya, in turn, would have a guaranteed off-taker, so it was a deal that worked for both tycoons who were La Salle classmates dating back to their grade school days.
As I said, it was Piki protecting his turf and when he didn’t agree to save ABS-CBN the way Gabby wanted it, Gabby felt the existential crisis of his own kingdom.
Ultimately, the focus was on protecting their respective fiefdoms, not saving the whole Lopez empire that their grandfathers and fathers built.
Thus, as a source told me, ‘there’s no empire anymore. If this were a movie, we’re seeing the closing credits.’
‘In short, the Lopezes are fighting over crumbs,’ the source added.
There are only two ways this would end: a forever war that would eventually diminish the value of their companies’ shares or the cousins agree to just sell everything and divide the loot.
Either way, it’s a bitter ending for an empire that was built on sugar.