MANILA Water Co., Inc. (MWC) incoming investor Razon-led Prime Metroline Holdings, Inc. is doing a mandatory tender offer of the water company’s shares as part of its acquisition.

A newspaper bulletin by Prime Metroline on Friday — which was disclosed to the stock exchange by MWC — said it is going to conduct the tender offer of MWC shares held by the public as part of its subscription to 820 million common shares in the water firm.

“The subscription (and hence the tender offer) is subject to certain conditions precedent including, satisfactory due diligence, waiver of pre-emptive rights, compliance with Philippine Competition Commission notification, and relevant third party consents,” it said.

As disclosed when MWC announced the entry of Prime Metroline earlier this week, the shares will be offered at P13 each.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said investors did not like the announced tender offer price as it is lower than MWC’s closing share price of P14.96 on Thursday.

Shares in MWC dropped P1.68 or 11.23% to close at P13.28 each on Friday.

But among other things, the entry of Enrique K. Razon, Jr. into MWC is expected to ease the company into an extension of its water concession agreement with the government, Mr. Tantiangco said.

Ayala Corp. said on Thursday that its executive committee approved giving Mr. Razon a 51% voting interest in MWC. This is through the granting of proxy rights by its wholly owned subsidiary Philwater Holdings Co. to Mr. Razon’s Prime Metroline — until he incorporates Trident Water which will be the vehicle for the transaction.

Ayala’s Philwater currently has 4 billion preferred shares in MWC, equivalent to 65.95% voting interest. Once proxy rights are granted to Trident Water, Ayala’s voting interest in MWC will drop to 31.6%.

“The tender offer, if it pushes through, would further tighten Mr. Razon’s grip on MWC. With this, we may see changes in MWC’s business strategies,” Philstocks’ Mr. Tantiangco said.

“Mr. Razon may… have something to bring to the negotiation table with the government which could increase the likelihood of a deal for the water concessionaire’s contract extension,” he added.

MWC, along with the other Manila water concessionaire Maynilad Water Services, Inc., is waiting on the government for a new concession term after President Rodrigo R. Duterte declared that there were onerous provisions in their previous contracts.

The two companies’ contracts were originally set to last until 2037, but Mr. Duterte threatened to cut this short.

Aniceto K. Pangan of Diversified Securities, Inc. earlier called Mr. Razon an ally of the government, and dubbed Ayala’s decision to go to him a good move.

Aside from the water contract, Mr. Tantiangco said Mr. Razon’s entry may also help expand MWC’s operations. “With Mr. Razon’s experience in the global market, we could see the water service firm’s operations expand beyond [our] borders,” he said.

“[Ayala Corp.] in turn would be taking the backseat in MWC which will then allow them to focus on their other core businesses — their property, banking, telecommunications, and their industrial arm,” Mr. Tantiango added.

Shares in Ayala Corp. at the stock exchange lost P10 or 1.32% to P750 each on Friday. — Denise A. Valdez