Stock Commentary

Zobels sell remaining MWC holdings to Razon for P14.5-B

Merkado Barkada
Zobels sell remaining MWC holdings to Razon for P14.5-B

Ayala Corp [AC 620.00 ?1.3%; 131% avgVol] [link] disclosed that its subsidiaries, Michigan Holdings and Philwater Holdings, would sell their combined holdings in Manila Water Company [MWC 26.60 ?1.5%; 123% avgVol] to Trident Water Company Holdings (TWC), which is owned by MWC’s current owner, Enrique Razon. The combined value of the two sales to TWC is P14.5 billion. The block of shares coming to TWC through Michigan Holdings was already processed and paid for (~P12.9 billion), and the remaining P1.6 billion worth of shares from Philwater Holdings will be purchased in installments over the next five years. AC confirmed that it will have no post-transaction common share interest in MWC, and that its voting stake will be “nil”. 

MB BOTTOM-LINE: In a weird way, the transfer of ownership and control of MWC from the Zobel Family to the Razon Family is one of the few lasting “achievements” of the Duterte administration. I put “achievements” in quotation marks because it’s not clear how the President’s overreach into the public markets benefitted anyone other than the obvious (MWC’s current owner). As longtime readers of MB will know I have a deep respect for Mr. Razon’s business acumen and operational quality, but I don’t know that MWC customers have necessarily felt any change as a result of this transfer, and I don’t know that minority shareholders have felt any change either. So maybe it was just Mr. Razon in the right place at the right time while Duterte rode the media waves of threatening the Zobels with death and dismemberment? Yeah, it was a weird time.

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