FREE Special Report: Sell Premium Leisure Corp. (PLC)

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BEL sets PLC tender offer price at P0.85

Belle Coro. (BEL) said that its Board of Directors has approved a tender offer price of P0.85 per share after receiving the Fairness Valuation Report from First Metro, which estimates PLC’s fair value to be between P0.60 and P0.85 per share.

BEL emphasized that the tender offer price is at the top end of First Metro’s valuation and well above PLC’s one-year volume-weighted average price (VWAP) of P0.60. The tender offer is set to run from March 22 and April 24, with settlement on May 9 at the latest.

It’s like MPI tender offer attempt #1 all over again

Investors are unlikely to accept a tender offer price that is lower than P1.01 per share, which is a 30% premium over the one-month VWAP of P0.7789. The final tender offer price is a mere 9.1% above this one-month VWAP and 14.9% above the P0.74 closing price of PLC prior to the announcement of the intention to tender. We also said previously that even at a tender offer price of P1.01, it is uncertain that shareholders who have held on to the stock since pre-pandemic times with acquisition prices above P1.20 would take BEL up on its offer.

Given this, we expect pushback from shareholders and a high likelihood that this delisting bid will fail. This is especially likely as the revised delisting rules of the PSE requires that the company brings its public float down to 5% before delisting.

Get out

Given the lowball offer, we expect PLC to drop to below P0.85. As such, we advise a tactical SELL and would not advise getting back into PLC unless the price goes more than 5% below the tender offer price. Similarly, the expected failure of this attempt to take PLC private would remove the appeal of BEL as the future flagship gaming stock of the SM group.

We likewise advise a tactical SELL on BEL. Despite the SELL recommendation, we maintain our fundamental-based Target Price for PLC at P1.33 and P2.32 for BEL.

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