A CONSORTIUM that includes Manuel V. Pangilinan and Japan’s Mitsui is taking private conglomerate Metro Pacific Investments Corp., which controls some of the country’s profitable power distribution, water, toll roads and hospital business.
First Pacific Co. Ltd. together with GT Capital Holdings Inc., a consortium including Mitsui and Co. Ltd., and a management investment group led by Pangilinan have launched a tender offer to MPIC shareholders to buy their shares at a price of 4.63 pesos per share.
The tender offer price takes into consideration the voluntary delisting rules of the Philippine Stock Exchange and represents a premium of 22 percent over the 12-months volume-weighted average trading price of MPIC on the PSE.
MPIC shares were suspended for trading at the PSE for a day.
The transaction also brings in a strategic partner, Mitsui, which the company said creates potential growth and expansion opportunities to MPIC through their operational expertise in various sectors.
“Mitsui’s leading capabilities and expertise in the global infrastructure business will further contribute to solidifying MPIC’s unparalleled offerings and position in the Philippines. First Pacific and GT Capital warmly welcome the long-term value and synergies offered by the strategic partnership with Mitsui,” the companies said.
The bidders said they feel that the value of MPIC’s core investments in infrastructure in the Philippines has not been fully reflected in the company’s share price for some time.
BDO Securities has placed a target price on MPIC at P5.60, while Maybank Securities placed a price at P6.20 per share.
MPIC shares, however, were stuck at more than P4 per share—at a 52-week high of P4.62 and 52-week low of P3.14 per share. MPIC was last traded at P4.26 per share.
“The tender offer and successful delisting will allow MPIC’s minority shareholders to realize a significant premium over historical share prices of MPIC. At the same time, a delisted MPIC will be better aligned with the objectives of the bidders to continue investing in long-term infrastructure projects supporting sustainable economic growth in the Philippines,” it said.
Under the tender offer, First Pacific, through its Philippine affiliate Metro Pacific Holdings Inc., would spend approximately $90 million to increase its stake in MPIC by as much as 3.8 percent, using internal financial resources. MPHI owns 46.1 percent of MPIC.
GT Capital would increase its stake to a maximum of 20 percent from the current 17.1 percent by paying some $70 million in the transaction for the residual 2.9 percent, funded through internal cash.
Mit-Pacific Infrastructure Holdings Corp., a joint venture of Mitsui and Japan Overseas Infrastructure Investment Corporation for Transport and Urban Development, would buy up to 20 percent of MPIC under the tender offer, becoming a shareholder for the first time.
The management investment group of Pangilinan would buy up to 10 percent.
“Participation of the management investment group is expected to closely align the interests of management with shareholders of the newly private MPIC,” it said.
The tender offer values MPIC at P133 billion in equity value, while the transaction costs about P48.4 billion.
“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 H. Young.
“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,” GT Capital CFO Francisco H. Suarez Jr.
MPIC owns 47.5 percent of Manila Electric Co., 99.9 percent of Metro Pacific Tollways Corp., 52.8 percent of Maynilad Water Services Inc. and 20 percent of Metro Pacific Health Corp.
“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,” Takehiko Ainoya, Mitsui’s general manager of Division I (Asia), Infrastructure Projects Business Unit, said.
Image credits: MPIC