Only 1 PDS shareholder renews SPA with bourse

By Arra B. Francia
Reporter
ONLY ONE shareholder of the Philippine Dealing System Holdings Corp. (PDSHC) renewed its share purchase agreement (SPA) with the Philippine Stock Exchange, Inc. (PSE), the bourse operator said on Saturday.
“The other shareholders did not think it was prudent of them to renew the SPAs with us because they have already another offer at another price. Except for one shareholder of PDS, the other shareholders who signed with us did not renew the SPA,” PSE President and Chief Executive Officer Ramon S. Monzon told reporters after the company’s annual shareholders’ meeting in Mandaluyong.
He declined to identify the shareholder that renewed the SPA.
The PSE has managed to secure SPAs amounting to around 72% of the PDSHC since the deal to acquire a majority stake in the fixed income bourse started in 2013. These PDSHC shareholders are the Bankers Association of the Philippines; Whistler Technologies Services, Inc.; Investment House Association of the Philippines; The Philippine American Life and General Insurance Co.; FINEX Research and Development Foundation, Inc.; San Miguel Corp. and Tata Consultancy Services Asia-Pacific Pte. Ltd.
The PSE renewed the agreements thrice, before they expired again on March 31.
It was at this time that the Land Bank of the Philippines (LANDBANK) countered PSE’s offer for a majority stake in PDSHC, offering to buy out the PDSHC stakeholders’ shares at P360 each, higher than PSE’s P320 per share offer.
The PSE itself has received an offer letter from LANDBANK to purchase its 20.98% stake in PDSHC for P472 million. Mr. Monzon noted they are still asking LANDBANK for clarification on its offer, specifically on when it plans to conduct due diligence and whether this will affect the final offer price, among others.
“We’ve been pursuing this acquisition, it becomes more difficult now because there is a higher offer. And we have decided that we will not engage in a bidding war with the government. But just as we are subject to an exemptive relief, any other purchases will need to apply for an exemptive relief,” Mr. Monzon said.
Any entity looking to acquire PDSHC would have to secure exemptive relief from the SEC, as per the Securities Regulation Code that says no single group can own up to 20% of an exchange.
The PSE was unable to secure exemptive relief from the SEC, which had directed it to bring down broker ownership in the equities market to less than 20%. After conducting a stock rights offering last March to dilute ownership in the PSE, trading participants still owned 21.71%, according to the SEC.
Further to bringing down broker ownership, the PSE has decided to weed out inactive brokers and declassify them as trading participants. The SEC would then have to revoke the registration of these inactive brokers to make the exercise successful.
“We wrote SEC a letter following up on their process to revoke the certificate of registration of the inactive brokers. We are just following up on that. We have not received a reply,” Mr. Monzon said.
Asked if the PSE could partner with LANDBANK for the PDSHC acquisition, Mr. Monzon said it is possible, adding that he has yet to meet with LANDBANK executives.
“Those things are all possible. We’ll probably try to set, we’ll have to clarify first our letter offer, that’s also a possibility,” he said.
LANDBANK last month announced it made an offer to the shareholders of PDSHC, in line with its goal to buy 4.167 million common shares in PDSHC — equivalent to a 66.67% stake — worth P1.5 billion. The offer period will last for 30 days or until May 20.
This was the second time LANDBANK will be offering to buy out shareholders of PDSHC. Its first bid ran from March 5 to April 5, where only one shareholder agreed to the bank’s proposal.
In January, LANDBANK bared its plan to acquire a majority stake in PDSHC, in a challenge to PSE’s bid.
Finance Secretary Carlo G. Dominguez III earlier said the PSE’s inability to merge with PDS has hampered the growth of the country’s capital markets. He has also expressed support for LANDBANK’s acquisition, saying it will be a profitable business for the government-owned bank.