Merkado Barkada
December 5, 2024 | 8:00am
DITO CME [DITO 1.59, down 11.7%; 83% avgVol] [link] disclosed that it successfully sold all of the 1,953,500,000 shares on offer as part of its follow-on offering (FOO) priced at P1.05/share. Those who purchased shares can trade those shares starting tomorrow, Friday, December 6. According to BDO Capital [BDO 155.70, up 0.3%; 89% avgVol] (the deal manager), the FOO “experienced strong demand” and was “fully subscribed with institutional investors outnumbering retail and individual participants.” As noted by InsiderPH, the FOO was required to comply with PSE rules “as the group undergoes a major ownership shift, with Dennis Uy poised to cede control while retaining a minority stake.” The FOO shares were priced at a 45% discount to its stock price at the time of the announcement (that discount has since shrunk to 34%).
MB bottom-line: While I know a handful of people who tried to catch a piece of this transaction, I have not talked to a single trader who is using this as an opportunity to beef up their long-term bags. 100% are looking to unload whatever they get as quickly as possible to scalp whatever price differential remains on listing day. Is DITO worth P1.59/share right now? I don’t think so. Is it even worth the P1.00/share that Summit Telco paid to take a significant stake in the company? I don’t think so. Neither did DITO at the time; they even implied that the price would have been lower if they weren’t constrained by the stock’s par value). What’s going to happen tomorrow when these shares hit the market? Based on what I’ve been hearing, I expect to see a lot of selling, but that’s just speculation on my part. I haven’t talked to any institutional investors to know their thesis behind participating in the deal, but that doesn’t mean much. Maybe they were too embarrassed to admit it, or maybe it’s just not that big of a deal. Either way, I’m going to be watching the market tomorrow morning very closely to see how this all plays out. As a disinterested observer, of course.
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