LOOK: Pangilinan-led Company Formally Files Voluntary Delisting With PSE

77% of Metro Pacific Investments Corp. (MPIC) shareholders have voted to allow the delisting of their shares from the Philippine Stock Exchange.

After four months of attempting to pull out from the Philippine Stock Exchange, Metro Pacific Investments Corporation has officially filed its application to delist from the local stock market. With that, the Manny Pangilinan-led company stated in a letter that they want their common shares to be delisted by October 9. 

This resolution was approved during a special shareholders’ meeting, where more than 77% of the shareholders supported the delisting. 

“Based on the votes class the shareholders representing 77.72%, or more than two-thirds of the total assignee common shares of the company voted in favor of the delisting from the PSE,” said Metro Pacific Chairman, President, and Chief Executive Officer Manuel Pangilinan. “On the other hand, the shareholders representing 0.24%, or less than 10% of the total common shares have voted against the resolution with respect to the delisting.”

“Therefore, the proposal to delist the common shares of the company from the main board of the PSE is approved by shareholders,” he added.

In line with this, the delisting tender offer is expected to end on September 7, 2023—based on the schedule that was posted during the meeting. Should the tender offer succeed, the company will officially be delisted from the exchange on October 9, 2023, with the “best and final” price of PHP 5.20 per share.

Why Bidders Believe the Share Price is Undervalued

The main reason why bidders are placing their offers is that Metro Pacific’s share price has been trading low for quite some time. According to First Pacific Company Ltd. Executive Vice President, Head of Group Corporate Development, and bidder representative Stanley Yang, “Whether that’s one year or up to five years, the offer premium is quite significant above where the share price has been.”

“As you know, part of this is also what we see as a misalignment between the long-term nature of infrastructure, these are often investments that span not just many years but even decades, and the short-term fluctuations of public markets and the volatility that we see within that,” he further explained.

“And so despite the management’s efforts to achieve strong financial results, the implementation of share repurchase programs, and even despite the investor relations efforts to bring in new investors and to really get the story out, the fact is that the share price has not responded over the last five years meaningfully. And therefore, with that discount, we believe that this is a situation that will continue, and this is also one of the reasons why the shareholders have made this offer,” he added.

A separate independent valuation report also revealed that the price of PHP 5.20 per share represents a premium of 37% over the share’ one-year volume weighted average price (VWAP) of PHP 3.80 each.

The Possibility of Proceeding to Delist

Analysts said that with the high turnout of shareholders’ approval, it is highly likely that MPIC can proceed with their delisting. 

With this, Philstocks Financial Inc. senior research analyst Japhet Tantiangco said, ”Based on the results of the voting, Metro Pacific’s voluntary delisting process will continue. As to whether it would be able to exit the market would depend on the success of the tender offer.”

“At the price of P5.20, Metro Pacific’s price-to-earnings ratio would stand at 15.29x, higher than its last five years’ average of 12.95x,” he added. “With this, the offer is seen to be attractive. Given this, we may see the tendered shares hit 95%, which in turn would lead to the success of MPI’s delisting.”

Supporting this statement, China Bank Capital Corp Managing Director Juan Paolo Colet also stated, “The delisting of Metro Pacific will add liquidity to the stock market and spur buying activity as we expect much of the funds obtained by institutional shareholders to be redeployed into equities. The delisting may also benefit Bloomberry Resorts, which is seen as the likely replacement of Metro Pacific in the PSE index.”

“Under the circumstances, there is a good chance they will obtain enough shares to proceed with delisting. For minority shareholders, this is their best chance to exit a perennially undervalued stock at a reasonable price,” he continued. 

So far, Metro Pacific’s share price increased by 7 centavos, valuing it at PHP 4.97 per share. 

What Voluntary Delisting Means 

Voluntary delisting occurs when listed companies opt for the permanent removal of their securities from the stock market so they can go private instead. The reasons may vary from one company to another, but some common reasons include cost reduction and a buy-out. Oftentimes, it may also be caused by scenarios where the costs of being publicly listed outweigh the benefits that come with it. 

For shareholders, their shares can still be traded despite the fact that their assets have become less liquid. In most cases, shareholders may also be compensated in cash so their shares can be bought out. On the other hand, they can also opt to hold on to their shares, despite the fact that it becomes harder to trade over time since it’s no longer listed on the market and will hence attract little to no interest from buyers or fellow traders. 

Given how the majority of MPIC shareholders have agreed to the motion of having the company delisted from PSE, it becomes easier for the shareholders to handle the situation. By agreeing with the file to delist from the PSE, it appears most of the shareholders have come to the understanding that their stocks are better off when held privately or when sold back to the company.