C01221-2018

SECURITIES AND EXCHANGE COMMISSIONSEC FORM 17-C

CURRENT REPORT UNDER SECTION 17
OF THE SECURITIES REGULATION CODE
AND SRC RULE 17.2(c) THEREUNDER

1. Date of Report (Date of earliest event reported)
Feb 27, 2018
2. SEC Identification Number
34218
3. BIR Tax Identification No.
000-153-610-000
4. Exact name of issuer as specified in its charter
Ayala Corporation
5. Province, country or other jurisdiction of incorporation
Philippines
6. Industry Classification Code(SEC Use Only)
7. Address of principal office
32F to 35F Tower One and Exchange Plaza, Ayala Triangle, Ayala Avenue, Makati City Postal Code 1226
8. Issuer's telephone number, including area code
(02) 908-3000
9. Former name or former address, if changed since last report
N/A
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common Shares 621,292,010
Preferred B Series 1 Shares 20,000,000
Preferred B Series 2 Shares 27,000,000
Voting Preferred Shares 200,000,000
11. Indicate the item numbers reported herein
Item 9

The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.

Ayala CorporationAC

PSE Disclosure Form 4-2 - Acquisition/Disposition of Shares of Another Corporation
References: SRC Rule 17 (SEC Form 17-C) and
Section 4.4 of the Revised Disclosure Rules

Subject of the Disclosure

AC Industrial Technology Holdings Inc., through its subsidiary ACI Solar Holdings NA, acquires a controlling stake in Merlin Solar Technologies, Inc.
Background/Description of the Disclosure

On February 24, 2018, AC Industrial Technology Holdings Inc. (“AC Industrials”), a wholly-owned subsidiary of Ayala Corporation (“Ayala”) completed its acquisition of a controlling stake in Merlin Solar Technologies, Inc. (“Merlin”). This transaction was done through AC Industrials’ subsidiary, ACI Solar Holdings NA, Inc. (“ACI Solar”), which had previously acquired an 8.2% stake in Merlin in 2016.
Following completion of the transaction and other related activities, AC Industrials will have an ownership interest of 78.2% in Merlin. The purchase price amounts to less than 10% of AC’s total shareholders’ equity.
Date of Approval by
Board of Directors		 Nov 20, 2017
Rationale for the transaction including the benefits which are expected to be accrued to the Issuer as a result of the transaction

The acquisition of Merlin forms part of AC Industrials’ strategy to own, develop, and commercialize disruptive technologies in rapidly-transforming industries. Merlin’s patent and IP portfolio allows a differentiated value proposition in solar which, when combined with AC Industrials’ core strength of providing manufacturing scale through IMI’s global platform, will provide AC Industrials with the opportunity to disrupt the solar energy industry.
Details of the acquisition or disposition
Date Feb 24, 2018
Manner

Purchase of secondary shares of the company
Description of the company to be acquired or sold

Merlin is an emerging company that is developing differentiated solar solutions resulting in products with high durability, flexibility, and increased solar power output, allowing for potentially innovative applications in areas with demanding environments, such as transportation and infrastructure. Headquartered in San Jose, California, Merlin currently has additional manufacturing facilities in Thailand.
The terms and conditions of the transaction
Number of shares to be acquired or disposed 14,249,912
Percentage to the total outstanding shares of the company subject of the transaction 98.2%
Price per share Total amt <10% of AC's total shareholders' equity
Nature and amount of consideration given or received

The amount is not material as it is less than 10% of AC’s total shareholders' equity.
Principle followed in determining the amount of consideration

Standard valuation methodologies such as the use of discounted cash flows.
Terms of payment

- Closing Payment: 52% of the total purchase price paid at closing
- Contingent Earn-out: 48% of the total consideration shall be paid to the Sellers upon meeting earn-out requirements in 2019 and 2020
Conditions precedent to closing of the transaction, if any

Not applicable.
Any other salient terms

- The acquisition was structured as a merger between Merlin and Merlin Merger Sub, Inc., a subsidiary of ACI Solar, in compliance with the legal requirements under Delaware law. The transaction structure shall also result to a change in the number of outstanding shares of stock of the surviving/acquired entity post-closing and post-transaction.

- The number of shares to be acquired at closing (14,249,912) includes shares and vested options, equivalent to 88% of the pre-transaction outstanding shares of Merlin.

- At closing, AC Industrials shall own 98.2% of equity interests in Merlin, inclusive of a previously-owned interest and the 88% acquired ownership interests. However, post-closing and after completion of related activities, including the rollover of unvested management options into a newly-established option pool for Merlin’s management team, AC Industrials shall own 78.2% of the post-transaction outstanding shares of Merlin.
Identity of the person(s) from whom the shares were acquired or to whom they were sold
Name Nature of any material relationship with the Issuer, their directors/ officers, or any of their affiliates
Romesh and Kathleen Wadhwani Trust N/A
Krishnan-Shah Family Partners, L.P. N/A
Patel Family Partners N/A
Venkatesan Murali N/A
KS Jangbahadur N/A
Raj Krishnan N/A
Bob Brainard N/A
Gopal Prabhu N/A
Ven Subbaraman N/A
Alex Levran N/A
Alelie Funcell N/A
Cherif Kedir N/A
Adam Brailove N/A
Arthur Rudin N/A
Arvind Chari N/A
Bijaya Paudyal N/A
Yuzhe (Brian) Fei N/A
Dong Xu N/A
Jesse Dam N/A
Kent Child N/A
Mandeep Sangha N/A
Prashant Ramesh N/A
Shoya Ishida N/A
Effect(s) on the business, financial condition and operations of the Issuer, if any

The acquisition of Merlin is part of Ayala’s strategy, through AC Industrials, to boost its presence in the global and domestic industrial technologies spaces by capitalizing on opportunities arising from disruptive technological shifts, changing industry landscapes, and increasing demand from end-users.
Other Relevant Information

N/A
Filed on behalf by:
Name Celeste Jovenir
Designation Investor Relations Head