PSE shareholders approve plans to buyout PDS

MANILA, Philippines – Shareholders of the Philippine Stock Exchange (PSE) approved the exchange’s planned acquisition of majority interest in Philippine Dealing System Holdings Corporation (PDS), the operator of the local bond market, for a valuation of P2.25 billion ($50.1 million).

“We have received approval to go ahead with the PDS transaction. We are targeting 3 months to complete the process, so hopefully by end July, we can close the deal,” said Hans Sicat, PSE president and CEO said in an interview following the company’s annual stockholders meeting held Saturday, May 2, at Wack Wack Golf and Country Club in Mandaluyong City.

The acquisition will enable the PSE to enlarge the stock exchange by combining both financial platforms as is the case in other countries.

“Because we will able to consolidate depository into our clearing house, which is the base model for many other exchanges, this means that we are coming closer to best global practice in terms of market infrastructure,” Sicat explained.

Following the approval, PSE has sent the updated term sheet offer to all PDS stakeholders, he confirmed.

Notable PDS shareholders, Bankers Association of the Philippines which holds a 28.9% stake, San Miguel Corporation (4%) and Golden Astra (.4%), already expressed willingness to sell their shares to PSE.

Other major shareholders of PDS include the Singapore Stock Exchange at 20% as well as Tata Consultancy Services Asia, Computershare Technology Services, The Philippine America Life and General Insurance Co., Financial Executive Institute of the Philippines, and the Social Security System.

PDS shareholders will only have until the middle of May to submit their reply to the offer after which the PSE will commence the buyout process, Sicat said.

Since the PSE already owns 20.89% stake of PDS, it will only need roughly P1.8 billion to buyout the remaining shareholders of the bond market.

Sicat said the PSE may pay part of this from cash on hand as well as borrow from the debt market to fund the acquisition.

PSE hopes to increase its stake in PDS to at least 67%.

Sicat said the transaction is also an accretive deal, one that will increase earnings per share, for PSE shareholders.

Fourteen of the current board re-elected

Aside from the approval of PDS buyout, shareholders of the exchange also elected 14 of the 15 current PSE board.

PSE independent director Cornelio Peralta, who has been a director for the exchange since 2004, retired from the board and was replaced by businessman Ramon Monzon.

Sicat will serve his 5th term this year. He has has been pushing for market reforms focused on increasing the liquidity in the stock market, improving corporate governance, and developing infrastructure to ensure the recent PSE index stellar growth.

Also re-elected to the PSE board as non-broker directors were Amor Iliscupidez of SMC Retirement Plan, Robert Vergara, president and general manager of the Government Service Insurance System, Annabelle Chua of Philippine Long Distance Telephone Co., Edgardo Lacson of the Philippine Chamber of Commerce and Industry,  and Jose T. Pardo.

Seven stockbroker-directors were re-elected to the PSE board.

They were:

• Eddie T. Gobing of Lucky Securities Incoporated
• Eusebio H. Tanco of Venture Securities Corporation
• Emmanuel O. Bautista of Deutsche Regis Partners Incoporated
• Ma. Vivian Yuchengco of The First Resources Management and Securities Corporation
• Francis Chua of BA Securities Incorporated
• Alejandro Yu of R.S. Lim & Co. Incoporated
• David Chua of Asia Pacific Capital Equities and Securities Corporation. – Rappler.com

$1 = P44.71