The planned tender offer for Metro Pacific Investment Corporation’s shares by significant and prospective shareholders will depend largely on whether government financial institutions and foreign investors will accept what stock analysts say is a low-ball price. “Government financial institutions (included in the public float) owned just over 1.6 billion shares which is about 5.6 percent of the total outstanding,” said Abacus Securities Corporation. It noted that, “If none of them tender, the possibility that the bidders will opt to terminate the offer increases.” This is because GFIs’ stake alone is enough to derail the planned tender offer for MPIC shares since it hinges on the condition that the firm’s public float falls below 5 percent which is the threshold set by the Philippine Stock Exchange for voluntary delisting. Abacus also pointed out that “foreign funds own 12 percent or more than 3.3 billion shares (also part of the free float), also as of end-March. They, too, may have the power to kill the deal as the current consensus price target for the stock is closer to P6.00.” “Foreigners might also angle for a higher offer since the value of MPI’s stake in Meralco alone is worth more than P4.63 per share. The question, therefore, is whether or not the bidders have a Plan B in case the threshold is not met," the brokerage said. It will be recalled that a consortium consisting of Metro Pacific Holdings, Inc., GT Capital Holdings, Inc., Mit-Pacific Infrastructure Holdings, Inc. of Japan’ Mitsui, and MIG Holdings Incorporated of MPIC Chairman Manuel V. Pangilinan announced a tender offer for all MPIC shares held by the public. The tender offer values MPIC at P133 billion in equity value. The bidders will offer to acquire the Tender Offer Shares at P4.63 each on an all-cash basis, which represents a 22 percent premium over the one-year Volume Weighted Average Price of MPIC’s common shares. However, Abacus sad the tender offer price is about 34 percent to 35 percent lower than the estimated book value of MPIC at end of the first quarter of 2023. “Already there are rumblings that the offer is too low and, yes, we agree…the one for Piltel (also initiated under MVP) was not exactly generous. In other words, this should not have been a surprise. Still, the success or failure of the tender offer may hinge on a number of shareholders (GFIs and foreign investors). COL Financial Head of Research April Tan also said “The tender offer price represents a steep 54 percent discount to our net asset value estimate for MPI and 47 percent discount to our fair value estimate for the stock.” “Furthermore, the tender offer price is at a 5.5 percent discount to the market value of MPI’s 47.5 percent stake in Meralco of P4.90 per share. As such, from a valuation perspective, we deem the tender offer price of P4.63 per share to be too low,” she added. Assuming MPIC gets the vote (two-thirds of all shareholders) for the delisting to proceed, Abacus said the tender offer report might not be filed until a few days later or maybe even in early June. “And then, the offer period could take as long as 60 days which means the results of the tender offer may not be known until as late as the first week of August,” said Abacus. It noted that, “Between now and then is over three months which is a lot of time for the GFIs and foreign shareholders to make noise. We don’t think it will take much to undermine confidence that the tender offer will succeed.” Tan said though that, “for shareholders who could not afford to risk their investment getting delisted, we advise either selling in the market today, or subscribing to the tender.” “Should the voluntary delisting push through, there will be no more avenues for shareholders to sell their MPI through the market,” she explained. BDO Securities Research Head Abigail Chiw also said that minority shareholder are really caught between selling cheap or be left behind if the delisting pushes through and finding a buyer for their shares will be much more difficult than in an open market. Also, the sale or purchase of unlisted shares will then be subject to various taxes that they do not need to pay for PSE-traded securities. On the other side of the coin, Tan said that, “should they (bidder) fail to get enough shares tendered or get exemptive relief for voluntary delisting, those that decided to tender will get their MPI shares back.” “Should this round of the offer not push through, we believe there is a likelihood for the consortium to increase the offer price in the subsequent round of tender offer,” said Tan. Thus, instead of recommending that shareholders accept the terms of the tender offer, Tan said COL is maintaining its BUY rating on MPIC with a fair value estimate of P8.79 per share. “We are maintaining our BUY rating on MPI. We believe that investor sentiment should improve with the completion of Maynilad’s rate rebasing exercise as this raises Maynilad’s earnings visibility going forward and eases regulatory concerns,” she said. Tan added that, “Based on MPI’s current market price of P4.26 per share, the company is trading at a 57 percent discount to its net asset value which implies that Maynilad and its toll road business are already worthless. “MPI is also trading below its 47.5 percent stake in Meralco (equivalent to 141 percent of MPI’s current market capitalization),” she stressed.