By James A. Loyola

In response to numerous complaints against its tender offer price, Melco Resorts and Entertainment (Philippines) Corporation (MRP) has strongly put its foot down and insisted that the price is fair and that it will pursue delisting even if it is not supported by minority shareholders.

In a disclosure to the Philippine Stock Exchange (PSE), the integrated casino operator noted that, under the PSE Rules on Delisting, parent company Melco (Pjilippines) Investments Limited (MCO) must acquire at least 95 percent of the outstanding capital stock of MRP for the PSE to consider and approve a petition for voluntary delisting.

“While it was also stated in the Tender Offer Report that in the event that MCO fails to obtain at least 95 percent of the outstanding capital stock of MRP in the Tender Offer (TO), MRP will nonetheless proceed with the request for voluntary delisting, such request remains subject to the approval of the PSE,” the firm stressed.

Stock analysts have noted that the tender offer price of P7.25 per share puts it below the value of comparable gaming firms in the Philippines and Macau.

They also said it represents a discount to the consensus fair value estimate of MRP’s share price and is unfair since it is heavily discounted compared to previous MRP stock offerings despite the expected turnaround in the revenues and profits of the company.

“MCO believes that an analysis of comparable publicly listed companies is highly supportive of the TO Price. Evaluating other publicly listed companies is not simply an arithmetic exercise… There are reasons why companies trade differently from each other,” said MRP.

The firm said it cannot be compared to Macau gaming firms since “they are also extremely different in that they operate in a different country with a different base currency, regulator, licensing and tax structure.”

Compared to local gaming firms, MRP said Travellers International Hotel Group, Inc. experienced a tragedy last year but it “trades at an artificially high multiple today as its current value is primarily driven by its soon to be open next phase and significant and very valuable land bank. As such, its multiple has limited comparative value.”

On the other hand, MCO believes that there are significant differences between Bloomberry Resorts Corp. (BLOOM) and MRP since Solaire benefits from a premium beach front location and has land to build a second phase and a new casino in another location.

MRP also noted that “independent sell-side analysts’ fair value estimates are usually calculated as a 12-month target price. The target price would only be realized if the assumptions that went into its determination are met over the next twelve months, and the investor holds onto the stock and sells at the right time.”