Landbank board gives green light to acquire 66.67% stake in PDS

THE LAND BANK of the Philippines’ (Landbank or LBP) board of directors approved in its meeting yesterday the move to acquire a majority stake in the country’s fixed-income exchange, putting the state bank in competition with the Philippine Stock Exchange (PSE) in this regard.

“LBP Board just approved in principle to acquire at least 66.67% common shares of Philippine Dealing System (Holdings) Corporation subject to compliance with all legal and regulatory requirements,” Landbank President and Chief Executive Officer Alex V. Buenaventura said in a mobile phone message on Tuesday.

Landbank, he said, “will still finalize timetable and offer price.”

It has been a week since Mr. Buenaventura proposed to the board on Jan. 16 that Landbank acquires a majority stake in the Philippine Dealing System Holdings Corp. (PDS). He said the move would be “profitable” since PSE share purchase agreements with PDS shareholders show the fixed-income exchange was “undervalued”.

Currently, the Landbank owns 1.56% of PDS through the Bankers Association of the Philippines (BAP).

PSE Chairman Jose T. Pardo had said on Friday last week that the equities exchange would continue to pursue its acquisition of the PDS. The state lender’s move comes amid PSE’s own steps since 2013 to acquire PDS shares in order to merge the country’s equities and fixed income bourses. Since June last year, the PSE has signed share purchase agreements with the BAP; Whistler Technologies Services, Inc.; Investment House Association of the Philippines; The Philippine American Life and General

Insurance Co.; FINEX Research and Development Foundation, Inc.; San Miguel Corp. and Tata Consulting Services Asia-Pacific Pte. Ltd., giving the PSE a 61.03% total stake in PDS.

The Philippine Competition Commission approved the agreements in November last year.

Mr. Pardo last Friday said he has assured Finance Secretary Carlos G. Dominguez III, ex-officio chairman of Landbank, that a looming P3.16-billion stock rights offer will bring down the ownership of trading participants in the PSE to 19% from 27.9% currently — one of the key requirements before the PSE can secure the Securities and Exchange Commission’s nod for a merger with PDS.

“[ N] o industry or business group shall beneficially own or control, directly or indirectly, more than 20% of the voting rights of the Exchange Controller,” according to Rule 33.2 (c) of the Securities Regulation Code.

Mr. Dominguez singled out the failure of the PSE to be compliant with the above-mentioned rule as the reason for Landbank’s move to take control of PDS. —