Tender offer for Digitel starts Wednesday

Philippine Long Distance Telephone Co. (PLDT) has set the schedule for its mandatory tender offer to buy out minority shareholders of recently acquired Digital Telecommunications Philippines Inc. (Digitel).

This was part of the consolidation of PLDT and Digitel to form the biggest telecommunications group in the country today.

“PLDT is implementing a tender offer to acquire the remaining 3.08 billion common shares representing 48.45 percent of the issued outstanding capital of Digitel held by shareholders other than PLDT,” the company said in a disclosure on Monday.

At the same time, PLDT said third parties holding convertible bonds issued by Digitel would be allowed to convert their holdings into common shares on or before December 8. These shares can, in turn, be sold back to PLDT.

PLDT estimated that third parties hold bonds that could be converted into 2.23 million common shares in Digitel. PLDT said it would acquire these shares at P1.6033 apiece, the same price PLDT acquired its existing Digitel shares.

Once completed, PLDT said Digitel would apply for a voluntary delisting. The company said shareholders may choose to be paid in PLDT shares, at a price of P2,500 each, or in cash. The tender offer was scheduled from Dec. 7, 2011, to Jan. 9, 2012.

PLDT’s tender offer comes after it acquired a 51-percent stake in Digitel from the Gokongwei family’s holding firm, JG Summit Holdings Inc.

Under the law, any group that acquires at least 35 percent of any listed firm is required to offer other shareholders to buy their shares at the same price of the original transaction. This tender offer rule aims to protect investors by allowing them to divest from a company when there is a significant change of ownership that may affect the way it operates.

With Digitel now under its control, PLDT corners about two-thirds of the country’s telecom industry, both in industry revenues and subscribers.

Earlier this month, Digitel said it would increase its authorized capital stock to P25 billion from P9 billion to accommodate the conversion of P16 billion worth of obligations into common shares by 2013 and 2014.

The convertible bonds accounted for a significant portion of the P69.1 billion paid by PLDT to acquire a 51-percent stake in Digitel from JG Summit.—Paolo G. Montecillo