Union between PSE, PDS on brink of being called off
This much-awaited wedding is now at risk of being called off due to lack of permit from the guardian.
The Philippine Stock Exchange (PSE) was unable to consummate deals to buy out other shareholders in the Philippine Dealing System (PDS) group as the deadline lapsed on Friday.
The closure of the deal was tied to the Securities and Exchange Commission’s (SEC) approval of the exemptive relief from the 20 percent limit on ownership by the PSE of what would be the country’s unified capital market structure.
The PSE was set to buy out other shareholders in PDS, the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), Philippine Depository and Trust Corp. (PDTC) and Philippine Securities Settlement Corp., to pave the way for the consolidation of the local capital market infrastructure.
Industry sources said the SEC was unable to issue the exemptive relief Friday and had asked the PSE to simply work to extend the deadline to close the deal. SEC chair Teresita Herbosa was out of the country.
But since there are many parties involved—referring to the multiple investors from whom the PSE would buy the PDS shares—the PSE is now in a dilemma on whether to pursue the deal or just walk away, industry sources said. The probability of walking out has become stronger.
The PSE intends to discuss its options with its lawyers first thing on Monday morning, one source said. As of press time, there was no reply from SEC officials.
The Bankers Association of the Philippines (BAP) and the PSE earlier made a last-ditch attempt to consummate the deal by seeking intervention from Finance Secretary Cesar Purisima to help iron out the regulatory kinks.
The PSE earlier signed a share purchase agreement with the BAP and other shareholders, effectively raising the PSE’s stake in PDS to more than 67 percent but subject to closing conditions. The exemptive relief from the SEC was cited as the “single, most critical item” that remains unresolved.
The PSE would have bought other shareholders in PDS based on an enterprise value of P2.25 billion.
If it decides to drop this acquisition bid, an industry source said one option for PSE was just to set up its own depository system.
PSE earlier tried to set up its own depository system, a move that the PDS had vehemently opposed as it currently provides the depository services for both equities and bonds.
