Ayala-Mitsubishi Alliance Calls for Ayala Corp. to Sell Existing Treasury Shares Costing ₱767.81 on Average for ₱650 Each

The Philippine conglomerate plans to sell treasury stock to Mitsubishi at ₱650 a share, compared with an estimated carrying cost of ₱767.81 for the shares already on Ayala’s books.

Ayala Corporation’s agreement to deepen its alliance with Mitsubishi Corporation comes with an unusual footnote: Some of the shares being transferred to the Japanese trading house are priced well below what Ayala is estimated to have paid for them.

Under the definitive transaction, Ayala plans to sell 46,241,392 common treasury shares to Mitsubishi at ₱650 apiece. The transaction also includes issuing 14,595,231 new common shares at the same price, issuing a new class of voting preferred shares, and making a voluntary tender offer for as many as 30,067,392 common shares held by other investors.

The treasury-share sale alone is worth approximately ₱30.06 billion.

But Ayala did not already hold all 46.2 million shares on its balance sheet. As of June 30, 2026, the company reported 16,174,700 common shares held in treasury. The remainder of the block intended for Mitsubishi is expected to come substantially from shares acquired through the tender offer.

Ayala’s financial disclosures indicate that its existing 16.17 million common treasury shares had an estimated carrying cost of ₱12.42 billion, or approximately ₱767.81 a share. That puts Mitsubishi’s agreed purchase price ₱117.81 below the estimated average cost of the treasury shares Ayala already owned.

In percentage terms, the ₱650 sale price represents a discount of about 15.3% to the estimated carrying cost.

For Ayala’s existing treasury shares, the arithmetic is stark:

16,174,700×₱650=₱10.514 billion

Against an estimated carrying value of approximately ₱12.419 billion, the reissuance price implies a shortfall of about:

₱12.419 billion−₱10.514 billion=₱1.906 billion

That does not necessarily mean Ayala will report a ₱1.91 billion loss in its income statement. Treasury-share transactions are generally treated as transactions within shareholders’ equity rather than as gains or losses from ordinary business operations. The final accounting treatment will depend on Ayala’s equity accounts and the specific entries recorded when the transaction closes.

Still, the comparison offers a window into the deal's economics. Ayala is effectively agreeing to part with shares it accumulated at a higher average cost in exchange for a broader strategic relationship, fresh capital and a larger long-term commitment from Mitsubishi.

A bigger transaction than the treasury-share discount

The estimated below-cost transfer applies specifically to the 16.17 million common treasury shares already held by Ayala. It should not be applied indiscriminately to the entire 46.24 million-share treasury block.

Ayala intends to conduct a voluntary tender offer, on Mitsubishi’s behalf, for up to approximately 30.07 million shares at ₱650 each. Those shares would be purchased at the same ₱650 price at which they are expected to be transferred to Mitsubishi. As a result, the newly tendered shares would not carry the same embedded difference as Ayala’s older treasury stock.

At full acceptance, the tender offer would require approximately:

30,067,392×₱650=₱19.544 billion

Public investors accepting the offer would receive that amount, while the acquired shares would become treasury shares before being transferred to Mitsubishi as part of the transaction.

Separately, Mitsubishi will subscribe to 14,595,231 newly issued Ayala common shares at ₱650 each, generating approximately ₱9.49 billion in additional proceeds. Mitsubishi will also subscribe to 71,858,808 Voting Preferred X shares at ₱1 a share.

Taken together, the transaction is valued at approximately ₱44.5 billion. Mitsubishi’s economic interest in Ayala is expected to rise from 4.7% to 15%, while its voting interest is expected to reach 20%, subject to closing conditions, shareholder approvals, and regulatory clearances.

Ayala expects to receive approximately ₱20 billion in net proceeds from the primary and treasury-share components after accounting for the funds required for the tender offer. The company has said it intends to use the proceeds for debt reduction, share purchases involving Ayala and its listed subsidiaries, and future growth initiatives.

Strategic value over historical cost

The decision to sell existing treasury shares at ₱650, despite their higher estimated average cost, suggests Ayala’s board is looking beyond the original repurchase price.

Treasury shares do not receive dividends and are excluded from outstanding shares while the company holds them. Reissuing them returns those shares to circulation and turns a dormant equity asset into cash. In Ayala’s case, the transaction also helps secure a substantially larger investment from a partner with which it has maintained a commercial relationship for more than five decades.

The agreed price may therefore be better understood as the negotiated entry price for the entire Mitsubishi transaction, rather than as an attempt to recover Ayala’s historical treasury-share cost.

The ₱767.81 figure is an accounting average based on purchases made at different times. It is not necessarily a measure of what the shares are worth today, nor does it establish the minimum price at which Ayala should sell them. The ₱650 price reflects the terms required to complete a much broader transaction involving new equity, treasury shares, a tender offer, voting rights, and long-term strategic cooperation.

For shareholders, the central question is whether the strategic and financial benefits of the Mitsubishi alliance will outweigh the estimated ₱1.91 billion equity shortfall embedded in the reissuance of Ayala’s previously accumulated common treasury shares.

Ayala is accepting less than its estimated historical cost on that portion of the transaction. In return, it is gaining fresh capital, reducing leverage, bringing in a more deeply committed strategic shareholder, and strengthening a partnership that could shape its next phase of expansion.

The transaction shows that the value of treasury shares is not always measured by the price at which they were purchased. Sometimes, their value lies in what a company can obtain by putting them back to work.

We’ve been blogging for free. If you enjoy our content, consider supporting us!

Disclaimer: This is for informational purposes and is not investment advice. Figures come from company disclosures and exchange data; valuation ratios reflect the author’s calculations based on cited inputs.