Asiabest to be transformed into 'whole ecosystem' holding company

Asiabest [ABG suspended] [link] provided comprehensive corporate disclosure on the proposed transaction that will see Tiger Resort Asia Limited (TRAL), ABG’s “major shareholder”, sell 200 million shares of ABG to PremiumLands Corp. (PLC) at P2.552/share for a total price of P510.4 million. According to ABG’s disclosure, if the deal goes through, PLC plans to use the ABG listed platform to consolidate “its respective assets and businesses in ABG in order to create an end-to-end infrastructure group in the Philippines...”, and that ABG would “remain a holding company” with the “value proposition of the Buyer working as a group is the vertically integrated nature of their organization that begins with raw materials extraction and processing on one end and finished products on the other end.” PLC plans to pursue two main businesses, with the first being mass housing, and the second being construction and construction materials. For its mass housing business plan, PLC plans to cause ABG to acquire PLC’s wholly-owned subsidiary, Kabalayan Housing Corp., and for its construction business plan, PLC plans to cause ABG to acquire PLC’s interest in three operating subsidiaries of a company called Industry Holdings and Development Corporation (IHDC), which include Concrete Stone Corp., Industry Movers Corp., and IHDC’s minority interest in EEI Corporation [EEI 3.58, up 6.9%; 42% avgVol].

MB bottom-line:  This is a secondary share sale, so none of the money transferred here will go to ABG. It all goes from the buyer’s group to TRAL. Now that this disclosure has been given, I expect the PSE will lift the trading suspension either this morning (possibly after a one-hour delay) or tomorrow morning, but that’s when things get interesting. ABG was one of the top-performing stocks of 2024, going from P3.01/share on January 1st to close out the year at P26.20/share, a 770% increase. How will speculators react to a deal that was done at a 90% discount to the market price? Things like corporate synergy or vertical integration always sound great on paper (that’s why these terms are fodder for countless marketing powerpoint presentations), but what will sustain ABG (or whatever it will be called after it is acquired) at this level or beyond will have to be earnings and growth. Will this collection of concrete, construction, logistics, shipbuilding, and property development provide something new to investors that will attract genuine interest, or is this just a vanity play to increase the media profile of the ownership group? I don’t have any skin in the game (and I don’t intend to), but I’m curious to hear from anybody in the field if they have any thoughts. Let me know!

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