Metro Pacific bumps up tender offer price by 12% to P5.20/share

MANILA  -The consortium of Filipino and foreign groups seeking to privatize Metro Pacific Investments Corp., a blue-chip company that controls some of the country’s biggest power and toll road assets, sweetened its offer to minority stockholders by 12 percent to P5.20 per share, raising the total tender offer value to nearly P55 billion.

The price was bumped up from P4.63 per share set earlier “to increase the chance of satisfying the acceptance conditions under the tender offer,” Indonesian billionaire Anthoni Salim’s First Pacific Co. Ltd., the single-largest shareholder of Metro Pacific, said in an overseas regulatory filing on Tuesday.

Shares of Metro Pacific, part of the 30-member Philippine Stock Exchange (PSE) index, were suspended on Tuesday and will resume trading the following session. The offer will be launched immediately after a special stockholders’ meeting on Aug. 8 and will end in early September this year.

Other members of the consortium are the Ty family conglomerate GT Capital Holdings, Metro Pacific chair and CEO Manuel V. Pangilinan and new investor, Mit-Pacific Infrastructure Holdings, a Japanese venture between Mitsui and government fund JOIN.

Delisting

Metro Pacific is being delisted as the buyers argued the company was better off being a private firm because its shares remain undervalued on the PSE.

They are offering to buy out minority stockholders that own the remaining 37 percent of the infrastructure giant to consolidate their control over the company before applying for a voluntary delisting.

The proposed transaction was first announced last April.

It attracted controversy after the initial offer price of P4.63 per share was assailed by a collection of stock brokerage houses, fund managers and minority stockholders for being a lowball offer since it was far below several valuation estimates.

This also forced the consortium, early last month, to change their third-party valuation provider to Unicapital Inc. amid conflict-of-interest concerns over the previous appraiser, which was never identified.

Still too low

The new offer price is 37 percent higher than the company’s average share price over the past year.

COL Financial Group Inc., among the stock brokers that opposed the first offer price, appeared to have softened its stance on Tuesday.

George Ching, analyst at COL Financial, said the new price was still 48 percent below their own net asset value estimate and 41 percent below their target price for Metro Pacific.

“As such, from a valuation perspective, we deem the tender offer price of P5.20/share to be too low. Nevertheless, for shareholders who could not afford to risk their investment getting delisted, we advise either selling in the market or subscribing to the tender,” Ching said in a note to investors.

Tender offer bidders should price the shares at the higher value of either the past year’s average price or the top price determined by an independent appraiser, according to the PSE’s rules.

Unicapital’s report, which was also made public, showed the firm using several valuation models that resulted in a price range of P3.37 per share at the low end and P5.10 at the upper end.

This means the consortium offered 10 centavos more than the upper end of the range.

The third-party appraiser provides the basis for the final tender offer price but the process can also be “subjective” due to the assumptions that are used to come up with detailed calculations, according to a stock market expert who requested anonymity.

For example, using the favored discounted cash flow approach, Unicapital assigned a 42 percent price discount to Metro Pacific assets, citing factors such as the global reopening apart from elevated inflation and geopolitical tensions in Eastern Europe.

The market expert said the discount was “very large” and other assumptions used were also “conservative”.

Unicapital assigned the largest values to Metro Pacific’s stakes in Maynilad Water Services Inc., Manila Electric Co. And Metro Pacific Tollways, which operates the North Luzon Expressway and Subic Clark Tarlac Expressway. It also owns the country’s biggest private chain of hospitals, the Light Rail Transit Line 1 concession and recently announced its diversification to agriculture.

RELATED STORIES:

PH fund managers’ group wants higher MPIC tender offer price

MPIC delisting delayed anew pending valuation report

Metro Pacific to go private after P49-B buyout deal