Eagle Cement [EAGLE 21.55 0.23%] [link] released a Tender Offer Report for the purchase program of EAGLE shares by San Miguel [SMC 98.75 0.35%] as part of its acquisition of EAGLE. Tender offer period started on November 7th, and will run until December 5th, with settlement on December 14th. SMC is offering P22.02/share.
MB Quick Take: This tender offer is a mechanism that allows minority shareholders (retail investors like you and me) to receive the same buy-out price that the EAGLE ownership group received when the transaction results in a change of ownership. It’s a way for SMC to consolidate its position quickly with cost certainty, while at the same time giving minority shareholders an orderly way to exit their positions.
The Keepers [KEEPR 1.11 0.91%] [link] board voted to reallocate P800m from its follow-on offering to fund the acquisition of its stake in Bodegas Williams & Humbert. The money was initially set aside for “new product development, new brand representations, and supply chain improvements and expansion”, which KEEPR said it still plans to do, just with internally-generated funds.
MB Quick Take: Another board-approved pivot, and this time, it’s Lucio Co using some of the FOO money to buy an asset from himself. Theoretically, KEEPR could have purchased the stake from Co and the other owners using FOO funds, and that would have just been like a normal conflict of interest, but here we have KEEPR exceeding the set-aside for “strategic acquisitions” by a substantial amount to buy an asset from its owner. I’m not saying that what they’re doing is wrong, I’m only advocating for there to be more controls over the board’s ability to make unilateral changes to the allocations for equity raise proceeds.
Ayala Land [ALI 26.00 1.17%] [link] Q3 profit soared 106.59% y/y, and up 7% q/q to P5.3 billion. 9M profit up 55% y/y to P13.3 billion. ALI specifically addressed the high-interest rate environment, saying that customer demand was “resilient” and “robust” despite the higher cost of borrowing. Q3 residential sales were up to P28 billion, which was 28% higher y/y. Commercial leasing revenue was up 64% to P24.4 billion.
MB Quick Take: We know that there’s a recovery, but my interest as a long-term investor is always in relating that recovery to where ALI was before COVID, and the data is sobering. ALI’s Q3/22 profit is 39% lower than it was back in 2019, when it posted P8.7 billion in profit in Q3. ALI’s 9M/22 profit is 49% lower than it was back in 2019. So at least for ALI, we are still very far away from being recovered to 2019 levels, let alone to where a long-term investor in 2019 would expect us to be by now in 2022. Now, higher interest rates threaten to compound the recovery problem by increasing costs and reducing demand. While ALI says that demand is resilient, it’s notable to me that we’ve started to see discussion of interest rates on demand appearing in a quarterly earnings press release. This is only the start of the problem. I wonder what we’ll see next quarter, and the quarter after that, and the quarter after that.
--