Tuesday, March 29, 2011

Holy Crap! PLDT Acquisition of Digitel, Operator of Sun Cellular, Now Confirmed!

IN THE NEWS from GMA News Online

At 1:47 PM today, GMA News Online confirmed PLDT's purchase of a 51.5% stake in Digitel, the operator of number 3 local mobile carrier Sun Cellular, for 74.1 billion pesos. Let me point out now that there must be a mistake with these numbers since Digitel only has 6.36 billion shares outstanding, which makes the offer equal to 22.63 pesos per share, which can't be right since the Digitel stock was last traded at 1.83 pesos yesterday. Anyway, we'll make the necessary corrections as more accurate information becomes available later in the day.

The deal brings Sun's 15 million subscribers into the PLDT fold, which includes Smart Communications' market-leading 40 million subscriber base. As I pointed out in a previous post, the consummation of this acquisition would place tremendous additional pressure to erstwhile second-placer Globe Telecom and its 25 million subscriber base. Last month, Globe reported a 22% decline in net income from the same period last year.

The two telco giants are expected to complete the acquisition process by the second quarter of 2011.

Digitel and JG Summit Holdings earlier today voluntary decided to halt trading halt due to a "major shareholder transaction." Yesterday, Digitel and JG Summit experienced huge one-day gains at 18% and 8%, respectively. At the end of today's trading, PLDT shares ended flat at 2,036 pesos and Globe surprisingly up by 7% at 746 pesos.

Congratulations to those who decided to buy Digitel shares last week (especially those who bought on Friday, after I posted the rumor article). You guys are in for humongous payoffs once trading for Digitel stocks resumes. :D

[UPDATE As of 2:57 PM]

As per ABS-CBN News, the 74.1 billion is not just for 51.5% of Digitel's stock (which is currently held by parent JG Summit), but is also for a convertible bond, payment for 34.1 billion pesos worth of Digitel's outstanding debt, and consideration for Digitel's remaining stock held by minority shareholders. And the deal is a share-swap transaction, with PLDT offering new stock (instead of cash) to JG Summit for the assets in question.

Unfortunately, there is still no clear per share offer figure for Digitel's stock, which is the information most investors would be more interested in.

[UPDATE As of 3:12 PM]

PLDT's official press release
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