MVP not ruling out raising MPIC tender offer price

MANILA  -Tycoon Manuel Pangilinan did not rule out future revisions to their P49-billion offer to buy out minority stockholders of Metro Pacific Investments Corp. (MPIC) before taking the infrastructure giant private through a voluntary delisting process.

While the company’s share price has long been considered undervalued, the recent tender offer announcement has some investors and stockbrokers up in arms over the “low” offer price of P4.63 per share.

COL Financial Group, the country’s biggest online stockbroker, advised its clients outright not to sell their shares in hopes the offer price would be raised.

Pangilinan, the chair and CEO of Metro Pacific who is looking to buy up to 10 percent of the company in his personal capacity, said they would allow the tender offer process to play out.

“We’re not against reconsidering the offer price we’re not saying we will improve the offer price but we are monitoring the share price movements of MPIC and, so far, I see no indications why we should adjust the offer price,” Pangilinan said during their quarterly briefing on Wednesday.

Pangilinan is the second-largest buyer in the proposed tender offer behind Mit-Pacific, a venture between industrial giant Mitsui and Japanese government investment fund JOIN, which is seeking 20 percent.

Metro Pacific’s main shareholders, Indonesian billionaire Anthoni Salim and the Ty family conglomerate GT Capital Holdings, will also bid for shares, increasing their respective stakes to about 50 percent and 20 percent.

Metro Pacific said its offer was a 22 percent premium over the company’s one-year volume weighted average price.

However, this was a significant discount to price targets given by several stockbrokers.

COL said this was 47 percent below its target price of P8.79 per share while BDO Securities head of research Abigail Chiw said the company had a fair value of P5.60 per share. Maybank Securities, in a report last Feb. 9, had a “buy” rating on Metro Pacific with a target price of P6.20 per share.

Pangilinan said the main reason for taking Metro Pacific private was their undervalued share price even when accounting for the typical discount given to conglomerates and holding companies.

The low share price, he added, has also prevented the firm from raising money through the stock market since this would be “punitive” to their investors.

“If we are already at our debt limit and we cannot raise equity because of our share price, what is our use [as a publicly listed company]?”, Pangilinan said.

Pangilinan said they were also wary of obstacles and “criticism” given their recent diversification to agriculture.

“We are getting those comments already. Well, we want to dilute our regulatory nature,” Pangilinan said.

Metro Pacific’s portfolio includes highly regulated businesses such as electricity distribution giant Manila Electric Co., water concessionaire Maynilad Water Services Inc., toll roads 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.

Pangilinan said Metro Pacific was still keen on growing its infrastructure portfolio even after delisting.

The company could also realize value by taking its other subsidiaries and units such as water, toll roads and hospitals public through initial public public offerings.

“We’re not saying just because we privatize, we are going to stop our ambition of developing a proper infrastructure company,” Pangilinan said.

“Financial markets have evolved into a different direction. Even if you are private, the doesn’t mean you are shut off from possible equity investors,” he said.

“There’s a whole slew of private investors out there in the world available with trillions of funds available for investments,” he added.

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