MANILA, Philippines—Shareholders of Philippine National Bank and Allied Banking Corp. approved on Tuesday the revised terms of their much-awaited merger, paving the way for the creation of the country’s fourth largest privately owned bank. Both banks are controlled by tycoon Lucio Tan
The merger will be undertaken via a share-for-share swap, after which PNB will be the surviving entity.
“The merger will mark a special milestone for both PNB and Allied Bank. The synergies arising from the broadened network, diversified deposit base and improved scale will provide a compelling value proposition for their various stakeholders,” the bank said in a notice to its stockholders.
During the meeting, PNB president Carlos Pedrosa told stockholders that following this imprimatur from shareholders, the bank would next seek approval from its regulators—the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Philippine Stock Exchange, Bureau of Internal Revenue and Philippine Deposit Insurance Corp.
Pedrosa said the effectivity of the merger would be the first day of the month following approval by the SEC.
The combined entity will have a distribution network of 646 branches nationwide and total assets of P514 billion, the fifth largest among local banks and the fourth among privately owned ones.
In addition, it will have the largest international presence by a Philippine bank across the Asia Pacific Region, Europe, the Middle East and North America.
With the merger, PNB aims to have a stronger platform for a wider range of personal and corporate banking products and services, and generate cost savings from branch re-engineering, economies of scale, consolidation of overlapping systems and corporate indirect overheads, realignment of front offices and the optimization of back office processing and support functions.
All the issued and outstanding common shares of Allied Bank will be converted to common shares of PNB at a ratio of 130 PNB common shares for each issued Allied Bank common share. All the issued and outstanding preferred stock of Allied Bank will also be converted to PNB common shares at a ratio of 22.763 PNB common shares for each issued Allied Bank preferred share.
To be able to do this, PNB shareholders approved the reclassification of its 195.17 million authorized preferred shares into common shares, thereby increasing its authorized common stock to 1.25 billion. Thereupon, the bank will issue 423.96 million new PNB common shares out of its authorized and unissued capital stock to be valued at P70 per share to swap for the outstanding Allied Bank common shares and preferred shares.
ING acted as financial adviser to the majority shareholders of PNB and Allied Bank for this merger. A fairness opinion was received in January from UBS Investments Philippines, which was mandated to review the share-swap ratios.