MPIC to delist, makes P49 billion tender offer

MANILA, Philippines — Tycoon Manuel V. Pangilinan is taking Metro Pacific Investments Corp. (MPIC) private, 17 years after it listed on the Philippine Stock Exchange (PSE) in 2006 by way of introduction.

Despite MPIC’s delisting, Japanese giant Mitsui & Co. Ltd, together with another Japanese partner JOIN, will acquire a 20 percent stake in the infrastructure and tollways conglomerate.

MPIC will make a P49-billion tender offer to buy out 10.5 billion company shares held by the public at P4.63 per share, a 22 percent premium over its average stock price for the past year.

Mitsui will join MPIC shareholders Hong Kong-based First Pacific Co. Ltd. and Ty-led GT Capital Holdings Inc. in the tender offer which will commence next month up to June.

First Pacific and the rest of the bidders feel that the intrinsic value of MPIC’s core investments in infrastructure in the Philippines has not been fully reflected in MPIC’s share price for some time now, the Hong Kong-based company said.

“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,” said First Pacific executive director Christopher Young.

First Pacific and GT Capital, for their part, welcome the long-term value and synergies offered by the strategic partnership with Mitsui.

Under the tender offer, First Pacific, through Philippine affiliate Metro Pacific Holdings Inc. (MPHI), would spend approximately $90 million or P5 billion to increase its stake in MPIC to 49.8 percent from 46.1 percent.

GT Capital, the listed conglomerate of the Ty Group, in turn, would increase its stake to a maximum of 20 percent from the existing 17.1 percent for roughly $70 million or P3.8 billion, funded through internal cash.

“We are pleased to participate in this tender offer to increase our current stake in Metro Pacific. This further diversifies GT Capital’s core portfolio. Our participation aligns with our mission of creating further value for our stakeholders and contributing to nation-building,” said GT Capital CFO Francisco Suarez Jr.

Mitsui, which has been in negotiations with MPIC for months now, hopes to hitch a ride on a potential infrastructure boom in the country, which for decades has lagged behind its Southeast Asian peers in terms of roads, bridges and other big-ticket structures.

It formed Mit-Pacific Infrastructure Holdings Corp. (Mit-Pacific), a joint venture with Japan Overseas Infrastructure Investment Corp. for Transport & Urban Development or JOIN to buy up to 20 percent of MPIC, becoming a shareholder for the first time in a new strategic initiative.

“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. 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.” said Mitsui’s general manager of Division I (Asia), Infrastructure Projects Business Unit Takehiko Ainoya.

The proposal to bring MPIC into private ownership will require a general meeting of its shareholders to vote on delisting from the PSE and would require approval by two-thirds of the total outstanding and listed shares of MPIC, with no more than 10 percent of the total outstanding and listed shares of MPIC voting against it.

April Lynn Tan, chief equity strategist at COL Financial, advised investors not to participate in the tender offer.

“[F]rom a valuation perspective, we deem the tender offer price of P4.63 per share to be too low and we advise 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,” Tan said.

She said the tender offer price presents a steep 54 percent discount to its NAV (net asset value) estimate for MPIC and 47 percent discount to its FV (fair value) estimate.

MPIC yesterday implemented a voluntary delisting of its shares. Its shares were last traded at P4.26 per share.

MPIC’s business include a 47.5 percent of Manila Electric Company, the biggest electricity distributor in the Philippines and one of the country’s largest electricity producers; 99.9 percent of Metro Pacific Tollways Corp., the largest toll road developer and operator in the Philippines; 52.8 percent of Maynilad Water Services Inc.; and 20 percent of Metro Pacific Health Corp.