Metro Pacific to go private after P49-B buyout deal
MANILA -Manuel V. Pangilinan-led Metro Pacific Investments Corp. (MPIC), the Philippine-listed infrastructure giant that controls some of the country’s largest utilities, is planning to go private
as its owners and a new Japanese investor group prepare to launch a P48.6-billion tender offer as early as next month.
Metro Pacific is principally owned by Indonesian billionaire Anthoni Salim and the Ty family conglomerate GT Capital Holdings.
Also joining the tender offer are the Japanese venture that includes industrial giant Mitsui and a private company owned by Pangilinan, chair and CEO of Metro Pacific.
They are seeking to buy out all of MPIC’s minority shareholders that own 36.6 percent of the company at P4.63 per share, which was a lowball price, according to stock market analysts interviewed by the Inquirer.
This comes after months of speculation that caused the company’s share price to surge last February and again in the days just before the deal was announced.
MPIC requested a two-day trading suspension until April 28 to allow investors sufficient time to review the deal. Its shares were last traded on Wednesday at P4.26 each.
Delisting from PSE
The tender offer buyers want to delist Metro Pacific from the Philippine Stock Exchange (PSE) and make it a private company.
“We envision this transaction will release value in MPIC for the benefit of our shareholders and we look forward to working with our partners in MPIC for the long term, undistracted by the need to focus on short-term – often quarterly – goals that public ownership often imposes,” Christopher Young, executive director at Salim-controlled First Pacific, the single-largest shareholder of Metro Pacific, said in a statement on Thursday.
Metro Pacific’s portfolio includes highly regulated businesses such as electricity distribution giant Manila Electric Co., water concessionaire Maynilad Water Services Inc., tollroads such as the North Luzon Expressway and Subic Clark Tarlac Expressway, the Light Rail Transit Line 1 and a chain of private hospitals, including Makati Medical Center and Asian Hospital and Medical Center.
Recently, it diversified into agriculture via a series of investments into modern dairy farms, coconut processing and vegetable production to address food security issues.
The deal faces risks, however, as COL Financial chief equity strategist April Lynn Tan said on Thursday the tender offer price was “super low” relative to the value of MPIC’s assets.
“The tender offer price represents a steep 54 percent discount to our [net asset value] estimate for MPI and 47 percent discount to our fair value estimate for the stock,” COL Financial, which maintains an P8.79 target price for MPIC, said in a report on Thursday.
It told investors “not to participate in this round of tender offer”.
“We believe there is a likelihood for the consortium to increase the offer price in the subsequent round of tender offer should it fail to acquire enough shares that will meet the threshold for voluntary delisting,” COL Financial said.
Offer price issue
Metro Pacific defended the price on Thursday, stating that the offer was a 22 percent premium over the one-year volume weighted average price, which meets the voluntary delisting rules of the PSE.
It also indicated it may scuttle the tender offer if it fails to acquire more than 95 percent of the company’s shares to meet the PSE’s rules.
The tender offer parties are Metro Pacific Holdings Inc., owner of 46.1 percent of MPIC; GT Capital, owner of 17.1 percent; Mit-Pacific, a venture between Mitsui and Japanese government investment fund JOIN, and MIG, a company controlled by Pangilinan.
The Mitsui venture alone is seeking 20 percent of Metro Pacific while Pangilinan’s company will get a 10- percent stake.
Metro Pacific Holdings may increase its stake to nearly 50 percent while GT Capital will increase its stake to 20 percent once the transaction is completed.
“By combining MPIC’s business foundation with Mitsui’s long-standing capabilities and experience in the global infrastructure business, we will contribute to the energy transition in the Philippines,” said Takehiko Ainoya, Mitsui’s general manager of division I (Asia), infrastructure projects business unit.
“In addition, we will support MPIC’s business development and create collaborative projects by leveraging our comprehensive capabilities in the digital field and other areas, thereby enhancing MPIC’s corporate value,” he added.
Last year, MPIC said profits jumped 15 percent to P14.2 billion as the contributions from operations rose 10 percent.
Power accounted for 65 percent of operating income last year, followed by toll roads (30 percent); water (14 percent); and other segments such as railways, healthcare, agribusiness, real estate and fuel storage, which incurred losses of P1.8 billion.