Tough times never last but tough companies do. But there are some companies that cannot handle the pressure of intense competition and investor expectations. The latest among them is Travellers International Hotel Group Inc (RWM), owner and operator of Resorts World Manila, which will delist from the Philippine Stock Exchange (PSE) in response to the changing marketplace without compromising its business strategies to competition. Change is constant while competition is intense in the gaming industry so it is bothersome to hear a lame excuse from a renowned gaming company run by postgraduate degree holder management team. In accordance with the Securities Regulation Code of the Philippines and the delisting rules of the PSE, RWM will conduct a tender offer of up to 1.58 billion common shares held by the shareholders other than First Centro Inc, Adams Properties Inc, Megaworld Corporation, Asian Travellers Limited, Alliance Global Group Inc, Premium Travellers Limited, Star Cruises Philippines Holdings BV, and the members of the board of directors. Upon completion of the tender offer, at least 95% of the total listed and outstanding common shares will be held by the private shareholders. The tender offer will be from 19 August 2019 to 23 September 2019 while the delisting date will be on 15 October 2019. RWM will buy out the minority shareholders at P5.50 per share using the fairness opinion of PricewaterhouseCoopers and Isla Lipana & Company. Based on a weighted average cost of capital of 12%, the discounted cash flow approach yielded a fair value ranging from P5.00 to P5.80 while the market approach yielded a fair value ranging from P5.00 to P5.70. Despite a tender offer price at the higher end of the fair value range and a premium to the volume weighted average price of P5.49 for the past 3 months and P5.46 for the past 6 months, there are some minority shareholders who felt shortchanged. Most of them argued that the tender offer price must be the same as the initial public offer price of P11.28 per share. A preposterous idea that is contrary to common sense. Although a historical cost method used in accounting in which the price of an asset is based on its original cost when acquired, the same cannot be used for the tender offer price for the reason that value changes over time. As Benjamin Graham stated, price is what you pay; value is what you get.
