PSE, BAP officials sign a deal seen leading to the unification of stock and bond trading platforms
THE PHILIPPINE Stock Exchange, whose shares of stocks are listed on its own bourse, went on voluntary trading halt on Wednesday as it firmed up a deal to take over a majority stake in the Philippine Dealing Systems Holdings Corp. (PDS Group).
The PSE announced a voluntary trading halt starting 1:30 p.m. on Wednesday “pending disclosure of material information.” Later in the day, the PSE announced that it had finalized a deal to buy the 28.91 percent stake held by the Bankers Association of the Philippines (BAP) and some member-banks in PDS for P650.55 million. This deal hikes its interest in PDS Group to nearly 50 percent.
The trading freeze on PSE shares will be lifted on Thursday.
PDS Group is the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), Philippine Depositary and Trust Corp. (PDTC) and Philippine Securities Settlement Corp.
In a press statement, PSE chair Jose T. Pardo said: “The support of the government, particularly the Department of Finance, the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission, played a vital role in bringing forth this transaction. We continue to work with them to achieve our common goal of seeing a more robust Philippine capital markets.”
“This agreement brings us a step closer to our goal of having a unified exchange for equities and fixed-income products. We are grateful to the BAP for all their support to finalize this deal,” PSE president Hans Sicat said.
The purchase will still be subject to the approval by the Securities and Exchange Commission, and by any government agency as may be required by law. Closing date will be agreed upon by the parties upon fulfilment of the conditions, but in no case later than Nov. 27, 2015, the PSE said.
It was earlier reported that PSE had offered to buy out all other shareholders at an enterprise valuation of P2.25 billion for 100 percent of PDS.
“The consolidation of the equities and fixed-income exchanges is expected to offer additional value to issuers, investors, and other market participants at various levels. It will also provide a more competitive landscape for the Philippine capital markets,” Sicat added.
“We are pleased to be part of this transaction that we believe will hasten growth and progress of the country’s capital market,” said BAP president Lorenzo Tan.
J. P. Morgan served as financial advisor to the PSE on this transaction.
San Miguel Corp. and another minority investor also earlier agreed to sell a 4-percent interest, giving the PSE an assured control of 54 percent.
Other shareholders are: Singapore Exchange Ltd. (20 percent); Tata Consulting (8 percent), Computershare Technology (8 percent), Philippine American Life and General Insurance Co. (4 percent), Financial Executives Institute of the Philippines (1.54 percent), Investment Houses Association of the Philippines (1.12 percent) and Social Security System (1.54 percent). What remains to be seen is how much control the PSE can get in PDS.
Under corporate laws, approval from 67 percent of shareholders is needed for a merger to happen.