SM Investments buys 28.79% stake in CREIT for P5-B

SM Investments [SM 972.00, down 1.0%; 63% avgVol] [link] spent P5 billion to purchase 1,884,374,000 shares of Citicore Energy REIT [CREIT 2.79 halted] from CREIT’s parent company, Citicore Renewable Energy Corp. (CREC), at a price of P2.6534/share. The shares were all secondary, meaning that the money that SM paid for the shares went to CREC (not CREIT), and the transaction was completed by way of a block sale. CREIT shares were voluntarily halted to “give the investing public sufficient time to consider or assess the impact of the execution of the block sale before transacting CREIT shares.” In the associated press release, CREC referred to its relationship with SM as a “partnership” that “unlocks potential synergies given the energy requirements of the SM group”. CREC is still CREIT’s single largest shareholder at 32.88%. 

MB bottom-line: While the price SM paid is at a ~5% discount to CREIT’s current market price, it’s in line with CREIT’s Q1 average price and oddly similar to where CREIT traded during that weird flash crash on March 19, the day before the Biz Buzz article broke the news an unnamed “blue chip conglomerate” was looking to buy a significant stake in CREIT. There was no talk in the press releases of SM getting representation on CREIT’s board, but I’d expect that kind of detail to come out once the deal is formalized. 

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