PSE secures majority ownership in PDS
THE PHILIPPINE Stock Exchange, Inc. (PSE) on Thursday inked a deal to purchase Whistler Technologies Services, Inc.’s 8% stake in PDS Holdings Corp. (PDSHC), allowing the PSE to raise its interest in the latter to over 50%.
In a disclosure issued on Thursday, the PSE said it agreed to buy Whistler Technologies’ 500,000 common shares in PDSHC, priced at P320 apiece, for P160 million.
Whistler Technologies’ stake is equivalent to 8% of PDSHC’s total issued and outstanding stock.
“With the signing of the aforementioned Share Purchase Agreement, the Company has agreed to acquire a total of 31.8% incremental equity interest in PDSHC. In addition to its existing 20.98% interest, the Company has now a total of 52.78% majority ownership interest in PDSHC,” the PSE said.
The PSE will make a payment of P147.02 million to Whistler Technologies on closing, while the remaining P12.98 million will be held in escrow. The price is based on PDSHC’s adjusted equity value of P2 billion.
However, the deal is still subject to certain closing conditions, such as the Securities and Exchange Commission’s granting of exemptive relief to the PSE for owning more than 20% of an exchange, as well as the approval of the Philippine Competition Commission.
“This transaction is envisioned to facilitate further growth in the local capital markets by introducing efficiencies in the trading and back office systems of both the equities and fixed income markets, among others. It is aimed at creating a better environment for the introduction of more products and services for the various market stakeholders, as well as the implementation of improvements in risk management processes,” the PSE said.
In June, the PSE also signed an agreement with the Bankers Association of the Philippines and its affiliate companies to buy their cumulative 23.8% stake (consisting of 1,488,902 common shares of stock) in PDSHC for P476.45 million.
PDSHC owns the Philippine Dealing & Exchange Corp., the Philippine Securities Settlement Corp. and the Philippine Depository & Trust Corp., the country’s sole depository for equities and fixed-income securities.
The PSE has been holding negotiations to buy out other PDSHC shareholders as early as 2013 in a bid to merge the two capital markets.
In March, the PSE stated that the goal was to own up to 67% of PDSHC. Other stakeholders of the fixed-income bourse include The Singapore Exchange Ltd. with 20%, San Miguel Corp. with 4%, the Philippine American Life and General Insurance Co. at 4%, among others.
The SEC had earlier rejected the PSE’s application for exemptive relieve in March 2016, citing the bourse’s failure to present “clear and convincing evidence” that the acquisition will not negatively impact PDSHC’s capacity to operate in the public’s interest, among others.
This led to the PSE’s failure to proceed with share purchase agreements with firms owning 40.06% of PDSHC at the time, including BAP and Whistler Technologies.
In an interview with reporters last June 14, SEC Chair Teresita J. Herbosa said they rejected the application in 2016 because PSE was not able to lay out the specific plans on the merger, but noted that the bourse already met with the PCC and corporate regulator, when sought for details.