Belle Corp sets PLC tender offer price at P0.85/share

Belle Corp [BEL 1.96 suspended] and Premium Leisure Corp [PLC 0.92 suspended] were both voluntarily suspended for the day yesterday after BEL disclosed details of its proposed tender offer to acquire PLC’s public float and eventually delist PLC from the exchange. According to BEL, it will conduct its tender offer for PLC shares from March 22 through April 24. BEL will pay P0.85/share, with settlement on May 9. BEL said the tender offer price was set by the PSE’s rules, which require the price to be the higher of the highest valuation based on the Fairness Valuation Report or the volume-weighted average price of PLC over the past year. According to BEL, the First Metro valuation report said that PLC was fairly valued at a range between P0.60/share and P0.85/share. The volume-weighted average price of PLC shares over the period was P0.60/share. BEL will need to acquire at least 95% of PLC’s outstanding shares to meet the PSE’s threshold for delisting.

MB BOTTOM-LINE: The tender offer price is 15% higher than PLC’s price on the day before the proposed tender offer was announced, which was P0.74/share; however, the dramatic uptick in demand for PLC stock after that announcement pushed the market price of PLC shares up to P0.92/share, which makes the tender offer price an 8% discount to PLC’s current market price. When the suspension is lifted this morning, I expect to see PLC’s stock price drop by about 10% to somewhere just below the tender offer price. This will put the ~400 million shares traded above the tender offer price in a losing position. To look at the tender offer from a technical perspective, BEL owns approximately 24.9 billion of PLC’s 31.2 billion outstanding shares. This means that it will need to buy at least around 4.7 billion shares through the tender offer to successfully delist PLC. At the tender offer price, this would cost BEL approximately P4 billion to complete.