Ayala Corporation (AC) will completely divest from Manila Water Co. Inc. (MWC) through the sale of all its stake to mogul Enrique K. Razon’s Trident Water Company Holdings Inc. for P14.5 billion.
Acquiring all of Ayala’s stake in MWC will result in Trident Water holding 81.9 percent voting stake and 62.2 percent economic interest, the remainder to vest upon completion of payments.
In a report to the stock exchange, AC said its executive committee approved the transaction involving the company and its wholly-owned subsidiary, Michigan Holdings Inc., with Trident as a result of a special block sales covering AC’s and Michigan’s 578 million common shares.
Another AC unit, Philwater Holdings Co. Inc. and Trident will also be executing a deed of absolute sale for 872 million preferred shares.
Ayala, after the sale of common shares, will retain an effective 12.08 percent in the company through the preferred shares which has no voting right.
Once the preferred shares have been fully paid for, through installments, in 2029, Ayala’s economic stake in MWC will drop to zero.
The transaction involves the sale of 577.997 million common shares and 872.487 million preferred shares, priced at P22.361 per share, reflecting a 7.2 percent discount to the 30-day volume-weighted average price.
Razon-led Prime Infrastructure Capital Inc.’s (Prime Infra) said the acquisition underscores its commitment to strengthen the growth and expansion trajectory of the water utility firm.
“Manila Water continues to deliver reliable and efficient water and wastewater services to communities in key metros in the Philippines and abroad. We look forward to the company’s future as we continue optimizing the business and expanding both our domestic and international operations” Razon, chairman of both Prime Infra and Manila Water, said.
Manila Water said it will continue to leverage Prime Infra’s expertise and track record in business development, project delivery, and operation of long-term assets in highly regulated industries and complex geographies.
Guillaume Lucci, president and CEO of Prime Infra, said the move is in line with Prime Infra’s intra-group synergy, as it continues to capture opportunities within its different business groups.
“The development solidifies Prime Infra’s market leadership in the water sector, driven not only by the performance and potential of Manila Water at home and abroad, but also by its synergy with our other majority controlled bulk water subsidiary WawaJVCo Inc.,” he said.
WawaJVCo is operating the first phase of the Wawa Bulk Water Supply Project, and developing the significantly larger Phase 2 Upper Wawa Dam capable of delivering 710 million liters per day of raw water.
Aligns with AC strategy
Analysts said the sale was in line with AC’s strategy to streamline its holdings and raise P50 billion to pare debts and to invest in its core businesses.
Manila Water provides water treatment, distribution, sewerage, and sanitation services to more than 7 million residents in eastern Metro Manila that encompasses 24 cities and municipalities.
On 1 February 2020, Prime Strategic Holdings, named then as Prime Metroline Holdings, Inc., signed a subscription agreement to 820 million common shares of Manila Water at a price of P13 per share.
The deal represents 24.96 percent economic rights and 11.91 percent of the total number of voting shares.
Prime Strategic Holdings then incorporated a company–Trident Water–for the transaction.
On 15 February 2021, Trident and Ayala’s PhilWater signed an agreement for the purchase of the latter’s 2.69 million preferred shares in Manila Water at P1.80 per share, amounting to a total of P4.84 billion.
The share purchase agreement reflected a 39.09-percent voting stake and 8.19-percent economic stake in Manila Water.
