Insider Spotlight
Ayala’s P20.1-billion cash infusion provides more room to cut debt, buy back discounted shares and fund growth.
Ron Acoba of Trading Edge Consultancy said much of the deal optimism may have been priced in before the announcement, while the tender’s benefit to minority shareholders remains unclear.
COL Financial's Richard Laneda retained their buy rating, with fair-value estimates of P607 excluding Mynt and about P680 including the fintech company.
The country’s oldest conglomerate opened 1.3 percent higher at P540 before falling to an intraday low of P487.60. It finished the session at P490, down 8 percent, on more than P1 billion in value turnover.
This came a day after Ayala announced a P44.5-billion deal that will raise Mitsubishi’s economic stake from 4.7 percent to 15 percent.
The transaction includes a tender offer for up to 30 million shares at a premium price of P650 each, its highest level in nearly two years. The timetable and allocation rules have yet to be disclosed.
What happened?
Ayala had outperformed the weak market ahead of the Mitsubishi deal, said Trading Edge Consultancy chief investment strategist Ron Acoba.
“AC’s relative strength may have reflected expectations of a potential corporate transaction, an idea that gained further traction following an InsiderPH report suggesting that a tender offer could be forthcoming,” Acoba said in a text message on Tuesday.
“However, the eventual deal structure appears less beneficial to minority shareholders than the headline premium initially suggests,” he added.
He likened the transaction to Gateway-KKR’s investment in the Lopez family’s First Gen, where a strategic investor entered at a premium valuation but the stock later fell amid limited immediate benefits for minority shareholders.
While the Ayala deal differs because it includes a public tender offer, key details remain unclear.
Tender price offers an anchor in a weak market
Nevertheless, the P650 tender price gives investors a reference point while broader market conditions remain challenging, said Richard Laneda, senior research manager at COL Financial Group.
“We do not expect price to re-rate close to the tender offer price of P650 as the market factors in proration, time to closing and dilution,” Laneda said in a note to investors.
Ayala rated a “Buy”
Still, Laneda said the P650 offer should help limit downside until the tender closes.
Under the deal with Mitsubishi, Ayala will receive P20.1 billion, enough to reduce parent-company net debt by 15 percent to about P118 billion if the entire amount is used for repayment, Laneda said.
“Mitsubishi flipping from a seller to a strategic shareholder removes a long-standing overhang on their position. The transaction validates our view that AC shares are undervalued and it also improves AC’s balance sheet, allowing them to pursue more [Net asset value]-accretive buybacks,” he explained.
The brokerage maintained its buy rating, with fair value estimated at P607 excluding Mynt and around P680 after considering GCash’s upcoming initial public offering.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
