First Pacific Ltd. Co. of Hong Kong is pulling out from Victorias Milling Co. Inc., less than two years after investing in the Negros Occidental-based sugar producer.
Victorias said in a disclosure to the stock exchange its board of directors approved the acquisition of 365 million shares held by First Pacific-owned First Agri Holdings Corp., Hargate Investments Ltd. and Nestar Investments Ltd. in the company at a price of P5 per share, or P1.825 billion.
The acquisition price represents a 9.8-percent premium to the stock’s closing price of P4.55 per share Friday.
Victorias on Monday asked the Philippine Stock Exchange to temporarily suspend trading of its shares, pending the disclosure of material information. The trading suspension was lifted at 10 a.m. Tuesday.
Sources said First Pacific had initially offered the Victorias Milling shares to other shareholders of the company, including LT Group of tycoon Lucio Tan, which owned 23.6 percent of the sugar producer. Sources said there were no takers.
Victorias said in a statement the acquisition sent a strong signal that the management believed that the future of the company remained bright and it was willing to invest in itself. Victorias said it had sufficient funds to finance the acquisition.
It said effectively, its earnings per share would increase to about 42 cents from 34 cents. “Management constantly pursues ways to enhance shareholder value not only by continuing excellence in operations, but also by cutting costs as highlighted in this year’s net income surpassing the P1-billion mark, a record in VMC’s 97 year existence,” Victorias said.
The 365 million shares will be placed under treasury shares of Victorias.
First Pacific led by businessman Manuel Pangilinan started buying Victorias shares from the open market equivalent to 5.78 percent in April 2014.
After buying more shares from the market, First Pacific also acquired a 100-percent interest in Hargate and Nester, which held direct interest in the sugar milling firm to increase the group’s ownership to 16.8 percent.
Luis Limlingan, managing director of Regina Capital Development Corp., said First Pacific’s exit in Victorias would allow the company to concentrate on another sugar milling firm Roxas Holdings Inc., which earlier reported a decline in net income in fiscal year 2015 and a net in the first quarter.
“The deal came at a good time because VMC was profitable the last quarter. Maybe it is a good time for MVP to exit and concentrate on his sugar business,” Limlingan said.
Roxas Holdings, which is 51-percent owned by First Pacific, registered a net loss of P125 million in the first quarter of fiscal year ending December 2015, a turnaround from a net income of P9 million recorded in the same period last year, amid operational challenges affecting its two manufacturing plants.
Sources said First Pacific might use the proceeds from the sale of its stake in Victorias to finance the planned stock rights offering of Roxas Holdings.