SM Group offers 90% premium to buy out minority stockholders of 2GO
The Sy-led SM Group will launch a P5.5-billion tender offer starting next week to buy out minority stockholders of logistics giant 2GO Group Inc. at a valuation that was double its price from just a week ago.
In a stock exchange filing on Monday, the family conglomerate SM Investments Corp. priced the tender offer at P14.64 per share, which was based on a fairness valuation report by BPI Capital Corp.
The offer for 15.4 percent stake held by the minority will run from March 15 to April 28 this year, it added.
This was in line with the SM Group’s plan to take 2GO private two years after it gained control of the company following the purchase ofthe shares of Davao-based businessman Dennis A. Uy’s Chelsea Logistics and Infrastructure Holdings Corp.
SM Investments is paying a nearly 90-percent premium over the cargo and passenger shipping, distribution and courier services company’s share price before the tender offer was announced last Feb. 28.
The valuation was also 72 percent higher than the P8.50 per share price it paid to Uy’s Chelsea Logistics in 2021.
While the premium was steep, the deal was relatively small for the SM Group, a real estate, banking and retail giant whose shares on the Philippine Stock Exchange were valued at about P1.1 trillion as of Monday.
Adrian Yu, head of institutional sales at stockbrokerage house COL Financial Group, said the SM Group’s offer was generous considering it was based on 120 times earnings from the previous year.
“From a valuations perspective, it’s quite expensive so hopefully if they privatize it, maybe they will have more related party transactions with the SM group which could increase its profitability,” Yu told the Inquirer.
2GO shares, which had started to rise even before the tender offer announcement, went under voluntary trading suspension on Monday “to allow the investing public equal access to and consideration of this information.”
The suspension will be lifted today on March 7, the company said in a stock exchange filing.
Despite its focus on its core segments, the SM Group makes smaller strategic bets on other sectors such as mining, power and logistics.
“We believe that there should be some [2GO] synergies with the SM Group that are yet to be fully priced in its earnings,” Yu said.
2GO, which was once owned by the Aboitiz Group before it exited the business over a decade ago, recorded turnaround profits of P312 million last year.
Revenues during the period rose 25 percent to P19.3 billion as business recovered following the removal of most pandemic restrictions.
Shareholders of 2GO will ratify the company’s voluntary delisting from the PSE during its annual stockholders’ meeting on April 18 this year, a stock exchange filing showed.