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By Krista Angela M. Montealegre, Senior Reporter

PSE takeover of PDS
snags on lack of SEC approval

Posted on November 28, 2015

THE ENVISIONED unification of the country’s equity and fixed-income exchanges suffered a major setback on Friday, as the deadline to secure regulatory clearance lapsed with the Securities and Exchange Commission (SEC) taking no action on the Philippine Stock Exchange, Inc.’s (PSE) application to buy out shareholders of PDS Holdings, Inc.

“We have not done anything on that yet... They (Markets and Securities Regulation Department) are still coordinating with the PSE with regards to the requirements,” SEC Commissioner Antonieta F. Ibe said in a telephone interview on Friday.

The PSE was hoping to obtain an 11th-hour approval from the SEC for its petition to own more than 20% of an exchange.

Securing the go-signal on Friday was deemed crucial for the PSE since the share purchase agreements (SPA) it signed with four PDS shareholders were set to expire that day.

All the agreements and documents are in place for the merger, PSE President Hans B. Sicat told reporters on Wednesday night, with the SEC approval being the only pending requirement needed to consummate the deals with the PDS minority shareholders.

“Without that go-ahead, there really is no deal,” Mr. Sicat had said.

The PSE is considering its options, including extending the SPAs with PDS shareholders, if it fails to get the SEC nod before the deadline, Mr. Sicat had said then.

PSE Chairman Jose T. Pardo said in a mobile phone message early Friday evening that the bourse will hold a special meeting next week to discuss its next move.

SEC Chairperson Teresita J. Herbosa said on Nov. 11 that the corporate regulator was considering monopoly concerns before clearing the merger.

So far, the PSE has inked SPAs with the Bankers Association of the Philippines; Finex Research and Development Foundation, Inc.; Whistler Technology Services, Inc. and Insular Investment Corp.

The four shareholders own a cumulative 40.06% stake in PDS, the holding company that owns the country’s sole fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx). The PSE holds 20.98%.

The PSE had earlier secured the commitments of other PDS minority shareholders, namely: San Miguel Corp. (4%) and Golden Astra Capital (0.36%) for the sale of their stake, but formal agreements have yet to be signed.

The PDS’ other stockholders include Singapore Exchange (20%); Computershare Technology Services (8%); Tata Consultancy Services Asia (8%) and The Philippine American Life and General Insurance Co. (4%).

Merger talks between the PSE and PDS started in May 2013, with completion originally targeted by the end of that year.