FPH spurns KKR’s First Gen bid

MANILA, Philippines — First Philippine Holdings Corp. (FPH) has rejected US-based Kohlberg Kravis Roberts & Co.’s (KKR) proposal to acquire an additional stake in First Gen Corp., saying the P35-per-share offer failed to reflect its “true value.”

The Lopez-led holding company said on Monday it had informed KKR that it would not pursue the private equity giant’s nonbinding proposal after “careful deliberation and consideration.”

READ: First Gen ‘ripe’ for delisting amid KKR buyout offer

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“FPH has determined that KKR’s proposal does not represent First Gen’s true value,” the company said.

KKR had proposed acquiring another 8.43-percent stake in First Gen from FPH before launching a voluntary tender offer at P35 per share for the energy firm’s remaining 11.67-percent public float.

At P35 per share, the proposal valued First Gen at roughly P126 billion.

KKR, which already owns 19.9 percent of First Gen, submitted the preliminary and nonbinding proposal on July 10. First Gen confirmed the proposal about a month later, after reports of a potential transaction surfaced.

FPH’s rejection sent First Gen shares sharply lower on Monday as investors unwound bets on a potential buyout.

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First Gen shares sank as much as 19 percent to P24.90 from its P30.70 close on Friday.

Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said the rejection could leave room for a higher bid from KKR or another interested buyer.

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Better offer

However, he warned that First Gen shares could give up much of their speculation-driven rally if no better offer emerges.

“In the absence of a new bid, First Gen should clearly communicate how it plans to unlock shareholder value,” Colet said.

READ: US firm KKR to invest $400M in PH

Trading Edge chief investment strategist Ron Acoba said FPH’s statement did not necessarily shut the door on a transaction with KKR.

Rather, the Lopez group rejected the valuation attached to the offer.

Acoba said KKR could return with a better proposal. Otherwise, the private equity firm may have to wait for another liquidity event to increase or dispose of its stake.

He estimated KKR acquired its First Gen shares at an average of about P26.50 apiece, or roughly P32 to P33 after adjusting for the peso’s depreciation. INQ