AYALA Corp. (AC) is the listed holding company of the Zobel family. It has four subsidiaries in which it owns more than 50 percent of outstanding capital — Ayala Land Inc., Manila Water Co. Inc., Integrated Microelectronics Inc. and Ayala Automotive Holdings Corp.
AC looks too small to have only four units that contributed P112 billion to its retained earnings, of which P80 billion represents “accumulated equity in net earnings of subsidiaries, associates and joint ventures,” and P2.3 billion the value of treasury shares. Minus all this, AC, as of March 31, 2015, had P29.73 billion “available for dividends.”
The Zobel-controlled public holding company is not as small as it looks based only on the number of subsidiaries. In fact, in a number of other businesses, it holds not more than 50 percent, the reason these are classified as associates. AC has an ownership profile that makes the Zobels among the wealthiest Filipinos in the country.
Bank of the Philippine Islands, for instance, is not a unit but only an associate. As of April 15, 2015, it listed AC as owner of 858.6 million shares, or 21.83 percent. Even if you add to this AC’s ownership of Ayala International Finance Ltd., which in turn holds 341.8 million BPI shares or 8.69 percent, this would add up to only 30.52 percent, an ownership ratio that would not make BPI an AC subsidiary.
Yes, Ayala DBS Holdings Inc. holds 837.6 million BPI shares, or 21.3 percent. Still, if AC owns 60 percent of Ayala DBS, this percentage would translate to 12.78 percent, which if added to 30.52 percent, would be equal to 43.3 percent, still not enough ownership for BPI to qualify as an AC unit.
The question is who owns AC? If AC is a holding company, it also has a parent stockholder that controls its outstanding capital stock.
Then the thick layers of ownerships should stop with AC’s parent and its stockholders. That parent happens to be Mermac Inc. The name stands for Mercedes MacMicking, the aunt.
Mermac is the holding company of the Zobels. Its majority stockholders are Jaime Augusto Zobel de Ayala and his younger brother, Fernando Zobel de Ayala who, together, own 4.55 million Mermac shares, or 60.5 percent. That is, they own 2.27 million shares each, equivalent to 30.25 percent.
Documents obtained by The Manila Times from the Securities and Exchange Commission show that Mermac has 7.56 million outstanding shares divided into 7 million Class B shares and 565,243 Class A shares. Since the ownership filing as of Dec. 31, 2103 did not provide the number of outstanding Mermac shares on which the percentages were based, Due Diligencer made a series of computations and arrived at 7.52 million outstanding shares – excluding 44,919 Class A treasury shares.
As of Dec. 31, 2013, AC had 599.4 million outstanding common shares, of which Mermac owned 303.7 million or 50.66 percent. At its high of P627 per share in the fourth quarter of 2013, Mermac’s holdings had a market value of P190.4 billion. This would give the Zobel brothers a combined paper wealth of P115.2 billion, or P57.6 billion each.
Here is the update on AC’s performance based on data compiled by the Philippine Stock Exchange.
AC common shares were last traded at P772.50 on Monday, making Mermac much richer – on paper – with its holdings’ worth P234.60 billion. Similarly, the Zobel brothers also got richer as their 60.5 percent holding translates to a paper wealth of P141.94 billion, or P70.97 billion each. A 23.2 percent increase in two years is not bad.
Wait. A year ago, AC did much better that, when analyzed, would make the Zobels poorer. At AC’s 52-week high of P823.50, Mermac’s 303.7 million AC shares had a market value of P250 billion. The stock’s peak raised the Zobels’ paper wealth to P151.3 billion, or P75.6 billion each.
Thus, AC was in a much better place a year ago. This means the stock fell 6.2 percent on Monday from P823.50 a year ago, making the Zobels poorer by that much, in percent.
On their own
As members of AC’s seven-man board, Jaime Augusto and Fernando carry two titles each. The former is chairman and chief executive officer while the latter is vice chairman and chief operating officer.
As the owners, the Zobel brothers top the list of six “most highly compensated executive officers” who, as a group, received salaries of P199 million and bonuses of P131 million in 2013 and salaries of P215 million and bonuses of P175 million in 2014. This year, AC estimated their salaries at P234 million and their bonuses at P127 million.
In addition to their pay and perks, Jaime and Fernando are also among the beneficiaries of AC’s stock options.
On May 20, 2015, Jaime Zobel sold 2,862 AC common shares at prices ranging from a high of P821 per share to a low of P810. After the sale, he still directly owned 36,869 shares. As of May 20, 2015, Fernando Zobel directly owned 47,059 AC shares after selling 2,862 shares. By availing himself of AC’s stock option plan, he ended up indirectly owning 35,841 shares.