PLDT takes control of Gokongwei-led Digitel in P74B share swap deal

MANILA, Philippines—Local telecommunications giant Philippine Long Distance Telephone Co. is taking over majority control of Gokongwei-led Digital Telecommunications Philippines Inc. in a share-swap deal with an equity value of P74.1 billion.

In a disclosure to the Philippine Stock Exchange Tuesday, Digitel’s parent company JG Summit Holdings said it would give up a 51.55 percent stake in Digitel in a share-swap deal that would give it a 12.8-percent stake in PLDT.

PLDT, led by the group of Manuel V. Pangilinan, will assume not just JG Summit’s stake in Digitel but also the outstanding liabilities such as the zero-coupon convertible bonds convertible into 18.6 billion Digitel shares by June this year, as well as some P34.1 billion in inter-company advances made by the JG Summit group and certain parties to Digitel and subsidiaries.

The purchase of assets from JG Summit is estimated at P69.2 billion, which will be settled by the issuance of one new PLDT share for every P2,500 consideration. PLDT will be required as well to undertake a mandatory tender offer for all the remaining common shares of Digitel held by minority shareholders.

The disclosure said the tender offer price for Digitel shares would be P1.60 per share, which would be paid in the form of either PLDT shares issued at P2,500 per share or cash, at the option of the Digitel shareholder. This is equivalent to the fully diluted price per share of the consideration net of the value of the intercompany advances. Should all the minority shareholders of Digitel accept the offer by PLDT, PLDT will issue a total of 29.65 million new shares, representing 13.7 percent of the enlarged share capital of PLDT.

Assuming full acceptance by the minorities of Digitel, the total transaction consideration would be P74.1 billion. This transaction is intended to be completed by the end of the second quarter.