ABG was recently taken over by Leyte tycoon Francis Lloyd Chua, who plans to inject his housing and construction interests into the listed but inactive firm.
This approach is also known as a backdoor listing, which allows a firm to list on the exchange without doing an initial public offering.
The acquisition also triggered a mandatory offer to buy out minority shareholders of ABG, who own 100 million shares or 33.3 percent of the company.
The tender offer, launched last April 14, is ongoing and will run until May 16 this year.
Unicapital valuation report
In its fairness opinion dated March 25 this year, Unicapital cited ABG’s status as a non-operating firm with P244.4 million in cash holdings and used a method based on the company’s assets and cash (called net asset value, or NAV) to estimate a fair share price of P0.83 to P0.84.
“Based on the fair value of ABG’s common share, the financial advisor concludes that the potential offer price of P2.55 per share in relation to the mandatory tender offer being higher than the estimated fair value range is fair from a financial point of view for ABG’s common shareholders,” Unicapital said.
Recent stock price history ruled out
What’s notable in this case is the large gap between the purchase price and the market price of ABG, which had surged as much as 770 percent last year on speculation over a potential backdoor listing.
ABG shares last traded at P26.20 before being suspended on December 16, more than 10 times the tender offer price.
In the report, Unicapital argued these prices were driven by hype and did not reflect the company’s fundamentals.
Erratic price movements
It discarded the average price method, which would have priced the tender offer from P5.96 to P22.13 per share, depending on the length of trading history.
“These erratic price movements have created significant dissonance between price and underlying fundamentals, rendering this valuation technique inapplicable,” Unicapital said.
The final method was the comparable transaction (CT) Approach, which Unicapital also ruled out, citing the absence of similar benchmarks.
ABG was previously owned by the Okada Group’s Tiger Resort Asia Ltd., which had considered using the dormant company as a shortcut to list the Okada Manila casino complex on the stock exchange.
