In a letter to the Securities and Exchange Commission, BDO SVP Manuel Zamora Locsin Jr. said: “Based on SMIC’s cash on hand and current credit facilities with the bank (BDO), SMIC has financial resources available and sufficient to satisfy full acceptance of the the tender offer shares at the tender offer price.”
Locsin said SMIC would have to spend up to P9.867 billion if all the rest of 2GO’s shareholders – 1.16 million shares or 47.15 percent of the company – accepted the firm’s tender offer scheduled from March 22 to April 21, 2021.
SMIC is compelled to buy the shares of other 2GO shareholders at the same price (P8.50 per share) it bought Uy’s 550.56 million shares or 22 percent stake in the shipping firm. SMIC already owns 30.49 percent of 2GO.
Multinational Investment Bancorporation, SMIC’s financial advisor in the deal, said the P8.50 offer price “is fair from a financial point of view and provides a slight advantage to the shareholders of 2GO that will participate in the tender offer.”
“We used the price-to-book (P/B), enterprise value to earnings before interest, taxes, depreciation and amortization (EV to EBITDA) and EV to Sales multiples. We computed for the average P/B, EV to EBITDA and EV to Sales ratios of the comparable companies and applied the averages to the financial information of 2GO. We did not apply the price earning (PE) ratio method since the 12-month trailing net income as of September 30, 2020 was negative, as reported in Bloomberg,” said Multinational Bancorporation.
The investment house said the tender offer price was 32 percent higher than the stock’s relative valuation of P6.4308 per share and 1.4 percent higher than its volume weighted average price of P8.3799 from January 1 to March 2, 2021.