Amid legal entanglements, Vega Telecom Inc., now jointly owned by the country’s two leading telco firms, has offered to buy out minority shareholders of Liberty Telecom Holdings Inc. at a price of P2.20 per share.
Because the tender offer was priced at a discount compared to the market price, shares of Liberty slid by 20.69 percent to close Monday at P2.30 per share.
In a report filed before the Philippine Stock Exchange Monday, Vega Telecom announced a tender offer for up to 165.88 million common shares representing 12.82 percent of the issued and outstanding common stock of Liberty. The offer will begin on Aug. 24 and end on Sept. 21 this year.
The price of P2.20 per share of Liberty, which trades under the ticker LIB, does not include yet the stock transaction tax, which the selling shareholder must shoulder.
The tender offer is a mechanism that gives minority shareholders the opportunity to exit when there’s a change in shareholder control.
Liberty is now jointly owned by PLDT Inc. and Globe Telecom, which have teamed up to buy out the telecom assets of conglomerate San Miguel Corp. for $1.5 billion. The assets include the much-coveted 700-MHz spectrum, described as one of the highest quality wireless frequencies capable of travelling longer distances, requiring fewer cell towers and enjoying stronger indoor penetration.
The tender offer is being launched ahead of the results of a review by the Philippine Competition Commission of the telecom buyout deal.
“The offer price of P2.20 is above, and a premium on, the prospective fair value range of P0.08 to P0.33 per common share of LIB, as provided in the valuation report and fairness opinion issued by Punongbayan & Araullo, an independent accredited auditor,” Vega Telecoms said in a notice to shareholders.
“Since the offer price is approximately more than six times the maximum of the fair value range of the shares of LIB, we believe that the offer price is magnanimous and more than fair and reasonable. Please be assured that the interests of all LIB shareholders, including those of the minority shareholders’, have been taken into consideration in the terms and conditions of the tender offer,” the company added.
The maximum total purchase price for the tender offer is P364.94 million.
Once Liberty is delisted, the company said common shares would no longer be traded on the PSE, affecting investors’ ability to liquidate their investments. Any capital gains generated from their subsequent sale or transfer would also be subject to the prevailing capital gains taxes. Subsequent sale or transfer would also be subject to documentary stamp taxes.
Trading for Liberty was halted for one hour at the PSE beginning 9 a.m. Monday to allow investors to digest the tender offer report.
The Securities and Exchange Commission, for its part, has vowed to ensure fair pricing for this voluntary tender offer.