By Krista A. M. Montealegre,
National Correspondent

THE AYALA and Yuchengco groups have initiated talks to merge their education businesses, allowing the unified entity to expand its reach and offer a complete education cycle.

In a joint statement, Ayala Corp. (AC) and House of Investments, Inc. (HI) announced they have executed a non-binding term sheet for the potential merger of AC Education, Inc. (AEI) and iPeople, Inc., which have a combined population of over 40,000 students.

AC and HI agreed to an exclusivity period to complete due diligence. The terms and conditions of the merger are expected to completed within the first quarter of 2018, with iPeople as the surviving entity.

Yuchengco-led iPeople controls Malayan Education System, Inc., which is operating under Mapua University, a leading private engineering and technical university in the country. Mapua has two subsidiaries, Malayan Colleges Laguna and Malayan Colleges Mindanao.

iPeople’s other unit is Pan Pacific Computer Center, Inc., which services the information technology-related requirements of the Yuchengco group and selected clients, according to a regulatory filing.

AEI, on the other hand, owns University of Nueva Caceres, one of the oldest and largest universities in Bicol, and APEC Schools, the largest stand-alone chain of private high schools in the country.

“The Yuchengcos going with the Ayalas is a big news regardless of what they are coming together for,” Rens V. Cruz II, analyst at Regina Capital Development Corp., said in an interview.

Mr. Cruz said the deal is complementary since AC is into basic education through APEC Schools, and iPeople is engaged in higher education through Mapua University.

“The potential merger completes an education cycle for both parties so it is a perfect synergy. We have yet to see if it translates to a substantial impact on bottom line or if it creates clamor for further retail investments in education stocks,” he said.

iPeople surged 8.61% to end at P14.88 per share, a new 52-week high. HI shed 0.13% to P7.69 apiece, while AC lost 0.75% to P1,057 each.

“A merger will provide the proponents a larger scale and reach, and will raise standards (of education),” PNB Securities President Manuel Antonio G. Lisbona said in a mobile phone message.

Mapua is a world-ranked Quacquarelli Symonds (QS) three-star university, which is defined as nationally popular, and may have also begun to attract international recognition. Three-star institutions also maintain “a reputable level of research and its graduates are attractive to employers.”

The school has the most Commission on Higher Education Centers of Excellence in Engineering.

A new player in the education sector, the Ayala group is taking advantage of the window of opportunity presented by the shift to the Kinder to Grade 12 program with APEC Schools, which has established 23 branches in less than three years of operation.

“Mapua’s reputation as a leading private engineering and technical university in the country, together with AEI’s ability to provide quality education leading to enhanced employability, at an affordable price, would enable the Yuchengco Group of Companies and Ayala Corporation to jointly contribute to the improvement of the quality of education in the Philippines, for the benefit of all sectors of society,” HI Chairperson Helen Y. Dee was quoted in the statement as saying.

“We are very pleased about this opportunity to partner with the Yuchengco Group of Companies to help build our nation through education. Our belief is that the potential combination of iPeople and AEI would create significant synergies that would enable us to better equip students for compelling futures,” AC Chairman Jaime Augusto Zobel de Ayala said.

The terms and conditions of the proposed merger will be presented for approval by the parties’ respective boards of directors and stockholders. The deal is subject to the requisite regulatory approvals as well.

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