Why You Should Tender Your MPI Shares
On August 8, 2023, shareholders representing 77% of the total outstanding common shares of Metro Pacific Investment Corporation (MPI) voted to approve the company’s delisting from the Philippine Stock Exchange. In the same special stockholders’ meeting, only less than 1% of the total outstanding common shares of the company voted against its voluntary delisting. With the company satisfying the exchange’s Amended Voluntary Delisting Rules, the tender offer for all the common shares of MPI, other than the shares held by the bidders which is a consortium consisting of Metro Pacific Holdings, Inc., GT Capital Holdings, Inc., Mit-Pacific Infrastructure Holdings, Inc., and MIG Holdings, Inc. and the qualifying shares of the directors of MPI ,at the updated price of Php5.20 has commenced.
The tender offer is for at least 9,106,567,439 common shares, representing 31.73% of its total outstanding and 86.79% of its free float. The tender offer has started on August 9 and will end on September 7. The settlement date will be on September 19, assuming the bidders for the shares are able to ‘buy’ enough for the delisting to push through.
Back in April 27, the same bidders offered to acquire the publicly held shares for Php4.63 per share on an all-cash basis. At that time, the price represented a 22% premium over the one-year volume-weighted average price or VWAP of MPI’s common shares. However, many analysts, brokers, fund managers, and investors voiced out that the offer price was still at a steep discount relative to its estimated net asset value or NAV and fair value estimates which went to as high as Php8.79 per share. Many of these analysts advised shareholders not to participate in the tender offer.
This prompted the PSE to revise their tender offer rules and require the price to be at a minimum the VWAP of the shares for one year prior to the board’s disclosure of its approval of the delisting or the highest valuation as determined by an independent valuation provider’s fairness opinion, whichever is higher. Earlier, the Php4.63 tender offer price was not given by an independent party.
MPI and the bidders, as a result, got the services of Unicapital, Inc. to produce a third party valuation. The new tender offer price of Php5.20 is actually Php0.10 higher than the highest valuation prices, using different metrics, provided by Unicapital. Still, the price may be deemed as very low compared to the company’s book value of Php7.04 and its consensus 12-month fundamental fair value of Php6.07.
While some may argue as such and once again hold out for possibly a higher tender offer price, we believe that it is not wise not to participate in the offer. As with the initial tender offer, the risk is that a shareholder will possibly be left holding on to ‘untradeable’ shares should the delisting pushes through. Investors holding a delisted stock will be left without an easy avenue to sell their shares. One option would be to find a different individual or party ‘over the counter’ that is willing to buy your shares from you. But why will they buy these shares from you without any prospect of them being able to sell much more being able to sell at a higher price? Another option would be to contact the investor relations department of MPI directly and ask them if they could buy you out. While you will still be owed any cash and stock dividends that they will declare in the future as a shareholder, they are no longer bound to buy back the shares that you hold from you. With that, the best course of action, again as in the first tender offer, is to either participate in the tender offer or to sell your shares in the secondary market while it is still trading. In fact, one may actually choose to even buy more in the market at its current price of Php5.00 to Php5.01 with the intention of tendering all shares at Php5.20. With all the associated fees, one will still be able to net around 2.89% by buying at the market and tendering the shares at Php5.20. While relatively small, a 2.89% net gain is still not that bad for a five week holding period.
To tender, there should be a new tab in your online platforms that you should click that will allow you to do so. For traditional account holders, you must notify your broker of your intention to do so. Take note that you should tender all your MPI shares on of before the tender offer period deadline on September 7, 2023.
Source: Bloomberg
_____
To know more about the Trading Edge Equity Advisor, kindly click HERE. Subscribe now to receive email alerts before the price moves! Here’s what our students and subscribers say. 🙂
*Consensus target price or average target price given by the major foreign and local brokers of various stocks on top of index names are available in our Equity Advisor!
