MVP closer to deal: GMA 7 acquisition price seen at P52.5B

Businessman Manuel V. Pangilinan is closer to a deal with GMA 7 at a price tag of about P52.5 billion, according to sources.

Businessman Manuel V. Pangilinan is moving closer to a deal to buy GMA Network Inc. (GMA 7) at an estimated price tag of P52.5 billion, potentially grabbing a leading market position in the broadcasting industry for convergence with his group’s flagship telecommunications enterprise.

Pangilinan’s group, through Mediaquest Holdings Inc.—a unit of the Beneficial Trust Fund of Philippine Long Distance Telephone Co.—is the party to the buyout deal that will give it close to 80-percent control of GMA 7, several sources familiar with the discussions confirmed to Inquirer.

The acquisition will be based on what was determined as an “enterprise value” of P52.5 billion for GMA 7. Enterprise value factors in preferred stocks, debt and cash reserves that are usually not captured by mere market capitalization. In this case, the package includes 1.5 billion in preferred shares that have five times more voting rights than common shares (now at 3.36 billion) but convertible at par to common shares at a 1:1 ratio.

GMA 7 is controlled by three families—the Jimenez, Duavit and Gozon clans. Another source close to the sellers said a deal was expected between P50 billion and P55 billion. After buying out the controlling stockholders, Pangilinan’s group is also expected to make a tender offer to minority investors.

Industry sources said Pangilinan’s group has started to organize bank financing to prepare for the prospective buyout but noted that part of the cost would be funded through equity.

Likewise on the table is a plan for Mediaquest to issue Philippine depositary receipts to PLDT, thus allowing the holding firm for media assets to expand its balance sheet and seal the big-ticket acquisition without breaching foreign ownership limits.

Meanwhile, conglomerate San Miguel Corp., which is also keen on getting into the broadcasting industry, has an alternative proposal to buy GMA 7 by paying a mix of cash and stocks in various subsidiaries, said a source familiar with the rival offer. But as the sellers wanted outright cash, the GMA 7 deal is seen to be in the bag for Pangilinan’s group.

Pangilinan, who chairs PLDT and is managing director of PLDT’s controlling stockholder First Pacific Co. Ltd., earlier said that the GMA 7 acquisition would likely be sealed within the year and that his group would pay in cash.