Megawide [MWIDE suspended] [link], the infrastructure construction firm led by Edgar Saavedra, disclosed that its board of directors had approved the purchase of 100% of the outstanding stock of PH1 World Developers from Citicore Holdings Investments (CHI) for P5.2 billion.
The acquisition target, PH1 World Developers (PH1), is a real estate development company that “aims to disrupt property development conventions through innovations and engineering technology”, and is responsible for The Hive Residences on Ortigas Avenue.
This is a related party transaction, since both MWIDE and PH1’s parent company CHI are owned and controlled by Mr. Saavedra’s management group. While the disclosure said that the purchase price was supported by a fairness opinion, the he PSE suspended MWIDE under the Substantial Acquisition Rule, and MWIDE will remain suspended until the company is able to provide comprehensive disclosure on the purchase.
MB BOTTOM-LINE
This is a pretty big deal for MWIDE, as the purchase price of PH1 is 79% of its P6.6 billion marketcap. It’s also a substantial shift from MWIDE’s normal development pipeline of infrastructure and project-based commercial developments.
I don’t know enough about the value of PH1 and the price that MWIDE is paying (or how it will pay) to have an opinion I’d feel comfortable sharing on the potential acquisition just yet, but it feels like the kind of move that provides MWIDE with an easy way to fill gaps in its calendar with internal projects.
Ever since MWIDE was rudely kicked out of the NAIA rehabilitation project, it’s felt like the company has had a hard time hunting enough big game to maximize its annual development capacity. Having some of these projects always humming in the background might be just what the doctor ordered to help fill out that schedule.
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