Merger of PSE, PDEx seen happening in ’13

MANILA, Philippines—The Philippine Stock Exchange is looking at the possibility of merging with the Philippine Dealing and Exchange Corp. within the year, thus creating a unified platform for trading of stocks and bonds.

“If we have our choice, we’d rather do it sooner rather than later, and hopefully this year, as opposed to two years from now,” PSE president Hans Sicat said in a briefing after the PSE’s stockholders’ meeting on Saturday.

Last Saturday, the PSE’s incumbent 15-member board of directors led by chair Jose Pardo and President Sicat secured a fresh one-year mandate from stockholders.

Likewise approved on Saturday was an increase in PSE’s authorized capital to 120 million shares from 97.8 million with a par value of P1 per share.

At least 25 percent of the increase in authorized capital will cover a 20-percent stock dividend declaration to stockholders, equivalent to 12.21 million shares.

Sicat said the increase in capital would support the PSE’s medium-term plan, which called for investments to boost infrastructure and diversify product offerings.

Asked whether the increase in authorized capital was meant to allow the PSE to use its own stocks as currency to enter into a merger and acquisition, Sicat replied in the affirmative.

“Basically if you have currency, it’s something you can use for an acquisition, so there’s potential headroom,” he said.

On whether PSE would be the one likely making the acquisition, Sicat said this would be difficult to answer right now. “I think we need to talk more,” he said.

“Outside of the fact that on paper, it’s good to have a consolidated exchange and (with) theory of M&A (merger and acquisition) and leveraging platform, all of them is nice but at the end of the day, each has stockholders which may view arrangements one way or another,” he said.

In case “something instantaneous” happens on the PSE-PDEx merger discussions, Sicat said the PSE theoretically would not need to set up its own depository system as originally considered.

PSE stockholders, meanwhile, also approved the relocation of the local bourse to a new 26-floor building in BGC to be called Philippine Stock Exchange One Bonifacio. Under the deal, PSE will contribute the value of its lot worth of about P805.6 million and get 6,400 square meters of office space plus the naming rights to the building.

Ayala Land Inc. has committed to deliver the building by end-2015.