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I. Company Profile
A. The History of Aboitiz & Co. To say that Aboitiz & Co. is a good example of a successful company would be an understatement, for its history is not just about its successes but of the feats the company had performed to achieve them. Their story is that of how one man started a company that grew into the corporate leviathan, and how his family held it all together. Aboitiz & Co. traces its beginnings to the Spaniard Paulino Aboitiz who hailed from a small town called Lequeitio in northern Spain. In 1870, he together with his wife Emilia Yrastoza and ten children migrated to the Philippines to start a small business in Ormoc, Leyte. Paulino entered into a partnership with an abaca dealer named Jose Meurterui, consequently naming their business Muertegui y Aboitiz. Unbeknownst to them both, this was the humble begins of an empire. Growth in business started the two men thinking of expansion. In 1907 they bought a small ship named Picket to facilitate faster transportation of their abaca products to Manila. It was common practice at the time, as ships were still the preferred way to travel. The ship later on became the mother vessel of the soon to be Aboitiz fleet, from which their other businesses would take off. It was during this time that Paulino started grooming his sons to take over the business. His second eldest son, Ramon, gladly assumed the position of partner in the firm in his father stead, managing it together with the help of his elder brother Guillermo. Continued success rained down on the Aboitiz family in the years to follow. So much so that in 1916, the family was able to buy out Muerteguis share for P95,000 (a small fortune at the time), dissolving Muertegui y Aboitiz partnership. In 1918, Ramon bought the steam boat Tubig from Smith, Bell and Co. and started the Aboitiz family into passenger shipping, plying the routes between the ports of Baybay, Inopacan,

Hilongos, Bato and Hindang in the south of the Philippines. The business was doing great. So, in 1919, Ramon sold all his shares in the company and retired to Spain with his wife and son. During this time, his brother Guillermo and Portuguese business man named Arnaldo F. Silva joined to form the corporation called Aboitiz y Compania Incorporada, which was made official on Feb. 4, 1920. Several Aboitiz cousins as well as Aboitiz brothers Paulino and Luis bought a significant number of shares, joining the corporation and thus making it truly a family business. Within a year, however, dark clouds descended over the newly incorporated firm. Due to a series of bad decisions and unfortunate circumstances, the company found itself deep in debt to the tune of P2 million. They were at the brink of bankruptcy and they needed help. In 1921, Ramon Aboitiz goes out of retirement and returns to the Philippines to salvage what he could of the company. He did not want to see what his father had built crumble to the ground. Refusing to declare bankruptcy, he negotiated with the Philippine National Bank for a loan close to P800,000 in order to restructure and rehabilitate the firm. He also made several other loans from friends and wealthy merchants; to Smith Bell in particular, Ramon had to promise a first choice of any abaca shipment in exchange for advancing funds to keep his operations going. This was a triumph in itself, considering that Paulinos second son had no collateral whatsoever, aside from the goodwill he built up in the past. It would take a total of twenty odd some years for Ramon to pay off all the loans he had made, but clearly he had saved the company. Not only that, the cash injection allowed the company diversify into different fields such as power generation and distribution, sugar production, and hardware retailing. Of course, that was not the end of our story or the trials the Aboitiz family had to face. During the Japanese invasion of the Philippines in World War II, the company tried its best to continue its operations. Before the war had ended however, severe bombing by both the Japanese and Americans saw to the destruction of their factory in Manila, as well as their power plants in Mindanao. Their Cebu operations was considered to have been hardest hit when their shipyard on Mactan Island was partly destroyed along with the hardware store and ice plant in mainland Cebu. Again, the company was left crippled.

Ramons strategy of diversification was the only thing that kept Aboitiz & Co. afloat. Unfazed by the destruction, Ramon started to build from the ashes. Ever the businessman, he realized that the immediate postwar period was a time for new opportunities that needed to be seized. Of course, luck also played a major factor for it was during that time that the US Navy contracted the companys Cebu Shipyard and Engineering Works for its exclusive use for two years. The stability provided by the contract allowed for the other Aboitiz businesses to rebuild and rebuild they did. During this time, the Aboitiz family strengthened their competencies of the different areas they held. They expanded its profitable power generation and distribution business and further delved into ventures such as, banking and finance, food, coconut oil milling, real estate development, and industrial chemicals. In 1930, the company ventured into power generation and distribution, and invested in a sugar plantation, a sugar mill, a shipyard and hardware store. The succeeding decades saw the company expand its power generation and distribution business and enter other business ventures, among them, industrial gases, banking and finance, insurance brokerage, food, coconut oil milling, construction, real estate development, oleo chemicals, overseas shipping, crewing and shipbuilding. Today, together with joint ventures and alliances with domestic and foreign partners, Aboitiz focuses on six major areas, namely: power, banking, food, land development, construction and shipbuilding. Over 60 operating companies with 27,000 team members now make up the Aboitiz Group of Companies.

Figure 1. The Business Structure of Aboitiz & Co.

B. Aboitiz Equity Ventures The publicly-listed holding company of the Aboitiz family is Aboitiz Equity Ventures, which in turn has shareholdings in a number of other listed and privately held companies. To fund growth opportunities, Aboitiz & Company listed Aboitiz Equity Ventures in 1994 on the Philippine Stock Exchange as the holding company for its power, banking, food and transport businesses. Aboitiz Equity Venturesmission is To create long-term value for all its stakeholders. Since it went public in 1994, it has been recognized in different international surveys as among the Philippines best companies. Aboitiz Equity Ventures investments in Power are coursed through publicly-listed AboitizPower, which debuted as a public company in 2007. The power generation holdings include renewable, such as geothermal and hydroelectric, and non-renewable plants. AboitizPower's portfolio of plants are diversified in fuel source and located throughout the country, enabling it to cater to the diverse needs of every power consumer. It is pioneer in offering Cleanergy, its brand of clean and renewable power. AboitizPower also has investments in a number of utilities located in different parts of the Philippines, including the second and third largest in the country in terms of power sales. These utilities are recognized for setting the standards in innovation, efficiency and customer service. In Banking, Aboitiz Equity Ventures is the largest shareholder of UnionBank, a publicly-listed universal bank also recognized as among Asias best companies in banking and finance. UnionBank consistently ranks as among the top banks in key performance ratios in profitability, liquidity, solvency and efficiency. It is a pioneer in the application of information technology in banking services. Aboitiz Equity Ventures also owns City Savings Bank, a leading thrift bank based in central Philippines and currently expanding into Luzon. In Food, Pilmico Foods Corporation is one of the largest flour mill companies in the Philippines. It is a top-3 player in the flour market and a leader in operating efficiency. Pilmico also manufactures yeast and other bakery products, and through its wholly-owned subsidiary, Pilmico Animal Nutrition Corporation, operates a feed milling and swine growing operation.

Figure 2. The Corporate Structure of Aboitiz Equity Ventures

C. Aboitiz Transport System Aboitiz Transport System (ATSC) Corporation's (ATS) history dates back to May 26, 1949 with the establishment of William Lines, Inc., a passenger and cargo shipping company headquartered in Cebu. On December 21, 1995, ATS consolidated its resources and expertise with two other Cebu based companies, namely, Carlos A. Gothong Lines, Inc. and Aboitiz Shipping Corporation. This marked the birth of William, Gothong & Aboitiz, Inc. (WG&A). In 2002, Aboitiz Equity Ventures, Inc. (AEV) acquired the combined holdings of the Chiongbian and Gothong Group. Subsequently, the company changed its registered corporate name from WG&A to its present one, which the Securities and Exchange Commission (SEC) approved in February 2004. ATS is an integrated transport solutions provider in the Philippines. Its principal business units are engaged in the movement of people operating under brand names "SuperFerry", "SuperCat", and "Cebu Ferries", and the movement of cargos operating under the brand name "2GO". The company's array of services geared towards cargo movements includes containerization, roll-on roll-off (RoRo) services, logistics and supply chain solutions. ATS also provides ship management and manpower solutions worldwide under the Aboitiz-Jebsen group of companies. The company's extensive presence throughout the country is carried out through its branch operations and agency networks. These are located primarily in Bacolod, Batangas, Cagayan de Oro, Calapan, Cebu, Coron, Cotabato, Davao, Dipolog, Dumaguete, General Santos, Iligan, Iloilo, Jagna, Manila, Nasipit, Ormoc, Ozamis, Puerto Princesa, Surigao, Tagbilaran, and Zamboanga. ATS has eight (8) operating subsidiaries and affiliates, namely, Aboitiz One, Inc., Aboitiz Jebsen Bulk Transport Corp., Jebsen Maritime Inc., Aboitiz Jebsen Manpower Solutions, Inc., Jebsen Management (BVI) Limited, Supercat Fast Ferry Corp., Zoom In Packages, Inc. and MCC Transport Philippines, Inc.

Figure 3. The Corporate Structure of Aboitiz Transport System


As the company continues to grow, it has shown exceptional capability to adapt to change in order to ensure the sustainability of its businesses. This is highlighted by the best practices that the company employs. Such practices enable the company to continually improve by finding and utilizing the best ways of working so as to achieve the business objectives all the while optimizing the use of available resources. The discussion below aims to provide insights as to how the implementation of best practices in different functions ultimately results to significant benefits for the company and its stakeholders. A. Planning The companys portfolio comprised of several investments in a diverse range of businesses. However, management has chosen to realign its strategy by analyzing where the company is currently standing and where it should be headed. This renewed focus enabled the company to capitalize on its core strengths thereby concentrating only on a number of businesses including that of power, banking, transport, food, land, construction and shipbuilding. The other businesses were either sold or closed down such as those involved in industrial gases, cement, paper, copra, food preserving, insurance, marketing, manufacturing and recopying. Proceeds of sale were then used to re-invest in power, which now the second largest power distribution company in the country. This focus strategy also enabled the company to continually innovate in its chosen businesses, as exemplified by the companys pioneering in different areas such as: the development of renewable and environment-friendly energy resources like hydropower; the application of information technology in its banking services and the introduction of containerization in the country. It has also allowed sufficient flexibility for modernization and adoption of management practices and strict standards of governance that in the end, all translated into better products and services for the customers which provide the company not only an edge over competitors but more importantly, long-term value for stakeholders.

B. Marketing Through the years, the Aboitiz brand name has equalled the companys commitment to quality. Not only does it communicate the time-honored values of integrity, trust and competence that drive the companys commitment for sustainable growth, but more importantly, it represents the passion for continuously finding and improving ways of ultimately creating and delivering value to all stakeholders. C. Financials Overall, the company implements a conservative management style which is manifested in its financial policies. However, the company does take calculated risks if warranted. Also, its financing needs does not rely much on debt, allowing it to be reasonably shielded from the effects of economic downturns, just as what happened during the Asian crisis. D. Human Resources The company employs a formal process for hiring and selection of employees, which is also applied to family members interested in joining the company. Exams must be passed and requirements for work experience must be met. They all have to start from the bottom and work their way up through merit. This reinforced the value of fairness among all employees. Starting from the bottom not only hones an employees leadership skills and establishes his track record, but also helps him gain the acceptability of his peers as he goes up the ranks. This is essential in establishing a team that is truly united by a common vision. Since the company recognizes that its strength lies in teamwork, the culture instilled amongst its employees is one that neither blames nor credits the efforts of an individual, but rather considers the collective efforts and accountability of everyone in delivering the results. E. Organizational Structure and Decision-making As of the time of writing of the groups reference, there were only 17 members of the family working for the company, seven of which belonged to the board of directors of Aboitiz and Company. There was also the board of advisers that was formed as a way to train the younger senior officers of the company to come up. Since there were only few family members involved in the company, there had to be more professional managers employed. However, the organization structure still remains very lean so as to facilitate an efficient and effective decision-making process, which is further enhanced by the companys values of integrity and trust. There was also an established separate family council whereby the entire clan including the in-laws can give suggestions related to running the business.

F. External Relations The company further enhances its capabilities by forming strong ties and alliances with both domestic and foreign partners. The business in shipbuilding as well as in the international maritime services came to materialize through the companys joint venture with a Japanese partner, Mr. Osamu Nakamura and the Jebsen group of Norway, respectively. Together, these ventures provide synergized strength that continually drives excellence and growth in their respective fields.

ATSC Board Of Directors

Jon Ramon M. Aboitiz Justo A. Ortiz

Chairman of the Board of Directors Chairman of the Compensation/Remuneration and Nomination Committee

Director of the Board Audit and Corporate Governance Committee Member

Sabin M. Aboitiz

Roberto D. Gothong

Director of the Board Audit and Corporate Governance Committee Member

Vice Chairman of the Board of Directors Chairman of Risk Management Committee

Washington Z. Sycip

Independent Director Chairman of the Audit and Corporate Governance Committee Risk Management Committee Member

Enrique M. Aboitiz, Jr.

President and Chief Executive Officer Compensation/Remuneration and Nomination Committee Member Risk Management Committee Member

Emily A. Abrera

Independent Director Compensation/Remuneration and Nomination Committee Member

Erramon I. Aboitiz

Director of the Board

Atty. Helen G. Tiu

Corporate Secretary

Figure 4. The ATSC Board


A. Core Values The Core Values and Beliefs of a company are highly influenced by the principles and philosophies of its founder or owner. The degree of influence is magnified specially in family owned corporations because relationships are not only bounded by profession but by blood as well. Take for example the core values of Integrity, Passion, Integrity, Competence and Dynamism exemplified in Aboitiz Transport Corporation. These core values were very much inherited from its founder Paulino Aboitiz and were passed on to the succeeding 4 generations of the Aboitiz family up to Jan Ramon Aboitiz. These core values have shaped his management style and as CEO, he has made sure that his subordinates observe these values as well. Passion Passion ignite ATS attitude and drive to constantly challenge industry standards to strengthen their competitive edge. Passion to deliver and perform way above industry standards unifies ATS and it brought about the birth of 2go, Super Cat, Cebu Ferries and the Joint venture AboitizJebsen. Integrity Aboitiz management uphold honesty, transparency, and fairness. They are committed to deliver constant growth, in a considered and stable manner. Competence The Aboitiz team is composed of highly skilled and dedicated people that provide peace of mind to their customers. The workforce is considered as Aboitiz most valuable asset and as a commitment to them, continuous training together with employee satisfaction is of paramount importance. Dynamism In line with its passion to serve and its commitment to competence, ATS is constantly looking to find new ways of delivering value to our customers

Apart from the above mentioned core values, ATS is also guided by the following: ATS Vision Our dreams inspire a passion for better ways to delight those we serve. ATS Mission ATS is in the business of providing solutions for the movement of people and products. We will keep on improving our people, systems and our network, making it easier for you to deal with us, creating more and more value for all. These statements sets the tune in the whole corporation and clearly states the reason why top executives at Aboitiz work with such Passion and Commitment to excellence.

B. Core Competency The Aboitiz name has been synonymous with transport since it purchased its first vessel, the Picket, in 1907. Today, it is the largest inter-island movers of passengers and cargo in the Philippines. ATS is the only total and integrated transport and logistics solutions provider in the country. Its principal business units are engaged in the movement of people operating under the brand names SuperFerry, SuperCat, and Cebu Ferries and the movement of cargos operating under the brand name 2GO. ATS' array of services geared towards cargo movements includes containerization, RoRo services, logistics and supply chain solutions. The company also provides ship management and manpower solutions worldwide under the Aboitiz-Jebsen group of companies. True to the vision of the founders, ATS continue to strive for excellence by setting new standards in the local maritime industry. Through Aboitiz-Jebsen joint venture, ATC hold the distinction of being the first shipping company in the Philippines to have received the prestigious International Ship Management (ISM) Code - a certification of compliance to international standards on safety management, environmental protection, emergency preparedness, maintenance of the ship requirements, qualified and well-trained crew, and development plans for shipboard operations. The joint venture showcases the merging of the best of the East and West; providing integrated maritime services.

The greatest driver of Aboitiz Jebsens continued success is human capital. The company's multicultural team of top-flight technicians, engineers and managers is recognized for its EFFICIENCY, RELIABILITY and ENTERPRISE. Certified by the American Bureau of Shipping for being ISO 9001:2008 compliant, ABOJEB puts forward quality and professionalism on bringing ship management and crew management services to our customers. This is further confirmed by the consistent honor of receiving the Top Performer and Excellence Awards in the past years. In answer to the challenge of the shipping deregulation in the 1990s, three of the biggest shipping lines in the country, William Lines, Inc., Carlos A. Gothong Lines, Inc. and Aboitiz Shipping Lines, respond with resounding measures to offer ultimate customer satisfaction and commitment to continued service, a new era of shipping was begun through Cebu Ferries. Cebu Ferries planted the banner and was born with modest beginnings. It now proudly marks the islands of Visayas and Mindanao with quality service in sailing. Responding to the 21st century thrust of going global, ATS introduced Super Ferry and Super Cat. These brands have reshaped the rules and practice of sea travel and have been pivotal and strategic to the fast ferry industry in the country. ATS have created synergies that have enlarged the fast ferry industry to benefit economies of scale and complement travel related products. With globalization, fast craft vessels have made it possible for enterprises and governments to crisscross throughout the region to conclude business deals, open new markets and build long-term partnerships. This development propelled commerce and trade and accelerated tourism and tourism-related activities to new and wider dimensions. The newest addition to the ATS family is the total supply chain solutions 2GO. 2GO leverages on unsurpassed local knowledge from over a hundred years of experience and a passion to consistently deliver cargo and information on time while offering simplified solutions to meet the most complex requirements. 2GO combines flexibility, know-how and an integrated menu of services as it provides solutions to customers. Capitalizing on their areas of expertise, ATC through 2GO have focused on four key service areas: delivery and transport, special services, tracking & customer support and supply chain solutions.


A. Two Acquisitions in the Past Decade Over the past ten years, the transportation business of the Aboitiz group of companies has experienced two major control changes. The first was in 2002, when Aboitiz bought WG&A. The second change in control came just this year, with the buyout of ATS by Negros Navigation, a competitor. B. The Birth of Aboitiz Transport System in 2002 William Lines Inc., Carlos A. Gothong Lines Inc., and Aboitiz Shipping Lines have dominated the shipping industry for many years until the three shipping giants merged in December 21, 1995 to form the very successful WG&A. It later became difficult for the three families to manage WG&A. For months before the consolidation, the families had been engaged in a boardroom battle over control of WG&A. This came to a head at the July 12, 2002 stockholders meeting where representatives of the Gothong and Chiongbian clans tried but failed to remove Enrique Aboitiz Jr. as company president and CEO. As relationships between Gothong-Chongbian and Aboitiz had been strained by this event, the sale of the 61 percent Gothong-Chongbian stake in WG&A to Aboitiz Equity Ventures was regarded as the reasonable solution. Aboitiz Equity Ventures purchased the shares at P3.98 each. Based on the agreement, AEV will pay half of the purchase amount in cash as of the closing date with the remaining balance payable over five years with interest fixed at 12 percent and a one year grace period on principal. Aboitiz Equity Ventures initially had 31 percent ownership in WG&A. Upon completion of the sale transaction, the Aboitiz group controled over 92 percent of the company. The deal was completed on September 25, 2002.

Responses to Change Despite the bitter-sweet end of the WG&A ties, the acquisition was considered a very strategic move for Aboitiz Equity Ventures. It consolidated Aboitiz ownership and management position in a company which is the dominant leader in the shipping industry. Very healthy returns and cash flow for the Aboitiz group was highly anticipated. With a deregulated industry, improved port facilities in Manila for both freight and passage, a strong brand name, low leverage, strong cash flows and a leadership position in the industry, WG&A can provide AEV with the earnings growth to complement its other investments in power, banking and food. In 2004, the Securities and Exchange Commission approved WG&A change of business name to Aboitiz Transport System Corporation. As for the constituent companies, the consolidation was viewed as a win-win situation for the shareholders. Victor Chiongbian, CEO of the Chiongbian group said: "We believe that we have divested at a very reasonable price and that we would be able to re-channel our resources in the fast-growing logistics business." Before the acquisition, each company had the following separate assets in the company: WILLIAM LINES INC. Mabuhay 1 (Manila-Cebu and Manila-Iloilo) Mabuhay 2 ((Mnl-Sur-But-Tag-Mnl and Mnl-Tag-CDO) Mabuhay 3 (Mnl-Dav-Dadiangas-Mnl and Mnl-CDO-Ilo-Mnl) Mabuhay 5 [after a few voyages permanent fielding overtaken by merger] Dona Virginia (Manila-Dumaguete-Ozamis-Iligan v.v.) Maynilad (Manila-Zamboanga-Davao) Masbate I (Manila-Masbate-Catbalogan-Tacloban) Zamboanga City (Manila-Puerto Princesa v.v.) Tacloban City (Manila-Batan-Dumaguit-Dipolog v.v.) Iligan City (Cebu-Iligan v.v.) Misamis Occidental (Cebu-Ozamis v.v.) CARLOS A. GOTHONG LINES INC.: OLO Akita (Manila-CDO-Butuan v.v. and Manila-Cebu v.v.) OLO Medjugorje (Manila-Dumaguete-Ozamis-Iligan-Cebu v.v.) OLO Sacred Heart (Manila-Roxas-Palompon-Isabel-Cebu v.v.)

OLO Lourdes (Manila-Dumaguit-Palompon-Cebu v.v.) OLO Rule (CDO-Cebu v.v. and CDO-Jagna v.v.) OLO Naju (Cebu-Ozamis v.v.) OLO Fatima (Nasipit-Cebu v.v. and Nasipit-Jagna v.v.) OLO Mt. Carmel (Iligan-Cebu v.v. and Iligan-Dumaguete v.v.) OLO Guadalupe [reserve] Dona Cristina (Cebu-Tacloban v.v. and Cebu-Palompon v.v.) Dona Lili (Cebu-Surigao v.v. and Cebu-Maasin v.v.) Don Calvino [reserve] ABOITIZ SHIPPING LINES SuperFerry 1 (Manila-Iloilo-GSC-Davao v.v. and Manila-Iloilo v.v.) SuperFerry 2 (Manila-Cebu-CDO v.v.) SuperFerry 3 (Mnl-Zamboanga-Cotabato v.v. w/ Boracay (summer) Dumaguit-Roxas v.v.) SuperFerry 5 (Mnl-Ceb-Ili-Dum-Mnl) and Mnl-Dum-CDO-Ceb-Mnl) Elcano (was not used; obsolete)

and Mnl-

After the consolidation, the following changes were made: The following ship names were changed: Mabuhay 1 became SuperFerry10 Mabuhay 2 became SuperFerry 7 Mabuhay 3 became SuperFerry 8 Mabuhay 5 became SuperFerry 9 OLO Akita became SuperFerry 6 Masbate I became OLO Manaoag (in 1998) Misamis Occidental became OLO Montserrat (in 1998) The following ships were passed to Cebu Ferries: OLO Lourdes OLO Rule OLO Fatima OLO Mt. Carmel Dona Cristina Dona Lili

Don Calvino SF 11/OLO Banneux (later) OLO Guadalupe Misamis Occidental/OLO Montserrat Masbate 1/OLO Manaoag (later) The following ships were sold: Tacloban City Iligan City Dona Virginia Zamboanga City

After the consolidation, ATS focused on moving towards being the only integrated transport solutions provider in the Philippines. It engaged principally in the movement of people operating under the brand names SuperFerry, SuperCat, and Cebu Ferries and the movement of cargos operating under the brand name 2GO. It also ventures into containerization, RoRo services, logistics and supply chain solutions, and ship management and manpower solutions.

C. Divestment of Aboitiz Transport System in 2011 In 2008, Aboitiz Transport System Corp. was badly hit by the economic crisis. Net income for the year was P402 million. The following year, total costs and expenses resulted in a net loss of P49.4 million for the company during the first nine months of 2009. ATS said fuel expenses account for majority of its total cost. The company noted its margins may improve if fuel prices continue to decline. To help mitigate the negative impact of fuel prices to margins, the company began transforming itself into value-added service organization with its efforts focused on integrating its services to build complete supply chain management solutions. During this very difficult time for the shipping industry, Negros Navigation Companys (NENACO) parent firm KGLI-NM Holdings Inc, a company owned by Kuwaiti Gulf Link Investments, offered to buy the Aboitiz family's transport business. In September 2008, ATS' parent company, Aboitiz Equity Ventures Inc., signed an agreement selling its entire 93.03 percent stake in ATS to competitor KGLI-NM for P5 billion. The sale, which includes all of the shipping and logistics businesses of ATS except the Aboitiz Jebsen Group, is scheduled for completion in January 2009. However, the deal fell through after the Kuwaiti group's finances were strained by the financial crisis.

In 2010, NENACO again offered to buy the respective equity stake of AEV and AEV's major shareholder Aboitiz & Company in ATS on a per share purchase price to be computed based on an ATS equity value of USD105 million (about P4.28 billion )or equivalent to approximately USD0.043 per share. This time, Nenaco will finance the purchase of Aboitiz Transport with equity investments from China-ASEAN Marine B.V., a Netherlands-incorporated company wholly owned by China-ASEAN Investment Cooperation Fund (CAF). China-Asean Investment is a private equity fund sponsored by the China Export-Import Bank. Under the terms of the deal with Nenaco, the Kuwaiti-backed firm will buy the Aboitiz familys interests in the transport sector, except the business interests the family co-owns with the Jebsen Group of Norway. These business interests include ship management, manning and crew management, and bulk transport held by the Aboitiz Jebsen group. To limit the deal with Nenaco, Aboitiz Equity will buy the 62.5 percent equity of Aboitiz Transport in Aboitiz Jebsen for P355.91 million. Aboitiz & Co. will also acquire Aboitiz Transports 50 percent equity in Aboitiz Jebsens chartering business for P44 million. At a special meeting on December 1, 2010, the Board of Directors of Aboitiz Equity Ventures voted unanimously to accept the offer of NENEACO to buy its shareholdings in its transport subsidiary. The deal was completed recently, on January 3, 2011. This was followed by a completed tender offer to buy all other remaining shares of ATS which effectively gave NENACO 98.12% ownership of ATS.

Responses to Change The Board of Directors of Aboitiz Transport admitted that its divestment was a very difficult decision to make, considering that the Aboitiz group has been in the transport business for over 100 years. The Board of Directors, however, felt the NENACO offer was reasonable and representative of ATS' value and that reinvestment of the sale proceeds in other identified areas will greatly enhance shareholder value over the long term. The expected P5-billion proceeds from the deal will be invested in other interests of the company including power and its banking arm Union Bank. Management also felt confident that the increased resources of the combined company will enable Aboitiz to provide innovative services, enhanced frequency and improved customer care to its valued passengers and freight, logistics and supply chain customers. Aboitiz claims they are happy to transfer the ownership of ATS to NENACO and its principal shareholders, the

Chinese-ASEAN Investment Cooperation Fund, because they share the same long term vision of Aboitiz and appreciate the need for industry consolidation and collaboration to improve efficiencies and lower transport costs. The Aboitiz Group is fully committed in the transition to the new management and they are assuring employees and management of ATS that their interests will be taken care of. The combined NENACO-ATS entity will have 31 vessels. The business of Aboitiz Transport and Negros Navigation will still be run as separate brands. Operations, however, will be integrated to cut costs and boost profitability.


A. CEO Profile Jon Ramon Aboitiz descends from a family of Spanishorigin in Cebu, with ancestry tracing back to the Basque Country in northern Spain. He graduated from University of Santa Clara, California with a degree of BS Commerce, major in Management. He started working in the family owned corporation in 1970 wherein he assumed clerical and rank & file positions. Eventually after learning the hard part of the business, he takes on several manager positions before he became the President of Aboitiz Shipping at the age of 27. The peak of his career started in 1994 when he became the Chief Executive Officer and President of Aboitiz Equity Ventures Inc. until January 2009. He also served at Davao Light and Power Company (DLPC) as the President and Chairman of the Board from 1988 to 2001, President and Chief Executive Officer in 2002. He serves as the Chairman of the Board of Pilmico Foods Corporation

and Pilmico-Mauri Foods Corporation. He has been Chairman of Aboitiz Transport System Corporation since January 21, 2011. He also serves as Vice Chairman of Union Bank of the Philippines and has been its Director since June 1, 2001. They have a ruling in the company which states that executives are required to retire from day to day operations at the age of 60 after which they can assume a non-executive position. After his retirement age, Jon Ramon Aboitiz serves as the Chairman of the Board of Aboitiz Equity Ventures Inc. and Vice Chairman of Aboitiz Power Corp. in May 2009. In addition to these positions, he also serves as trustee of the Ramon Aboitiz Foundation Inc., the Aboitiz Group Foundation Inc. and the Association of Philippine Foundations, and is a member of the Board of Advisors, Washington Sycip Policy Forum at the Asian Institute of Management.

B. Personnel Qualities Leaders do not command excellence, they build excellence. Excellence is being all you can be within the bounds of doing what is right for your organization. To be effective, the CEO must be first a leader of good character. Personality traits and characteristics affect the ones ability to lead and to make sound decisions for the best interest of the company. Thus, it is important to assess the traits and leadership qualities of Jon Ramon Aboitiz, the President and CEO of Aboitiz and Co. Dedicated to his craft He spends whatever time or energy is necessary to accomplish the task at hand. He goes to work early in the morning and sees to it that everything goes smoothly as planned. Fair in dealing with others He deals with others consistently and justly. Before passing a judgment, he first checks all the facts and hears everyone out. He does not jump into conclusions based on incomplete evidence. Humble Despite of his position in the corporation and status of the Aboitiz clan, Jon Ramon remains humble and down-to-earth. He is not self-effacing but rather tries to elevate everyone by recognizing their accomplishments. In their system, everyone works as a team.

Creative He sees things in a different perspective and thus lead followers in new directions. To widen his options, he gets outside of the box that constrains solutions.

C. Being a role model As the CEO of Aboitiz, he is a type of leader that people look up to and admire. He provides inspiration and motivation to his subordinates to seek out accomplishments. To be an effective leader, he exhibits the following characteristics: Trustworthy He possesses integrity and does the right thing even if no one is looking or even if he does not receive acknowledgment for his act. He has consistency of purpose, operates out of discernible principles, and stands for something worthwhile and detectable. Perseverance He leads by example and shows the importance of dedication and hard work. If leaders could work hard to attain something, then others can also do it as well. Respect for Others How leaders treat others speaks volumes about who they are. Jon Ramon knows the importance of his employees to the success of company, as such he treats them fairly and with due respect. He listens to others and also considers opposing points of view.

D. Support to radical changes (organizing and resourcing for changes) Jon Ramon Aboitiz envisions the future of the organization. He critically examines the business, its current performance and resources, and its evolving environment, in order to determine the need for change. He continues the initiatives of his predecessors in expanding and strengthening the company. With the current state of the economy, he believes that to be able to develop, they need to create more employment for the people, for them to have more purchasing power.

E. Support to vision One of the philosophies of the company is to be the best at what they do. They are not necessarily no. 1 but being the biggest is not that important. Quality and Customer focus are their top priorities. To support the vision and philosophies of Aboitiz, Jon Ramon develops a passion for better ways. Whatever the company do, he is always looking for a better way of doing things. He redefines their brand essence, driven by the companys initiative to lead and to set the trends in the industry.

F. Mandated empowerment He believes that nothing can be done by one person alone, that something of lasting value is almost always the result of a group effort. He brings out the best in each of those who follow, seeks the development and advancement of all employees, and delights in each persons growth in capability and character. Thus, he involves his people in decisions wherever possible and continuously encourages them to excel in their craft.

G. Leadership Jon Ramon Aboitiz was the fourth president of Aboitiz following the footsteps of his grandfather and father. He rose from the ranks from being a messenger and assistant until he reach the top position. When it comes to his leadership style, he is more of a transactional type. In order to foster supportive relationships, he keep the lines of communication open so that his employees feel free to share their ideas and in return he can offer direct recognition of their unique contributions. For him success is not because of one person but the collective efforts of many people, seen and unseen. He encourages creativity and nurtures people who think independently. He believes that learning is a value and that unexpected situations are seen as opportunities to learn.

References: Aboitiz y Compania, the history of a Spanish business in Cebu, Central Philippines, Irene R. Sino-Cruz, Philippine Daily Inquirer accessed on March 21, 2011