PSE-PDS merger on track, completion of consolidation targeted for Q3

MANILA-- The Philippine Stock Exchange, Inc. (PSE) has taken one step towards the merger with the Philippine Dealings System Holdings Corp. (PDS), boosting hope it can complete the acquisition by the third quarter of 2017.

The PSE on Wednesday signed a term sheet with the Bankers Association of the Philippines (BAP) signifying the Exchange's intent to acquire the latter's 28.9-percent stake in the PDS.

The acquisition will bring to 49.88 percent the PSE's ownership in the PDS, the holding firm for corporate bond bourse Philippine Dealing Exchange Corp. (PDEx).

The PSE currently has a 20.98-percent ownership in PDS.

"That's (third quarter target) doable. They are making progress, they are moving into direction that we are comfortable with. Their target so far seems on track," Securities and Exchange Commission (SEC) Commissioner Ephyro Luis Amatong said in an interview.

Amatong said PSE would then have to negotiate with the other shareholders in its bid to acquire an additional stake to buy out at least 66 percent of the PDS in order to take control of the unified entity.

He explained that while working on the commercial terms, the PSE at the same time needs to comply with all regulatory requirements.

"There (should be) a continuity as to service. So once there is an acquisition, there will be no break in the service provided by either Exchange," Amatong said.

"We want to see some monetary benefit to the investing public and to the issuers in terms of possible fee adjustments because we expect the transaction will result in some kind of operational savings for combined entity," he added.

Amatong further said PSE's request for regulatory approval of merger depended on the completion of the commercial transaction and the acquisition of at least 66 percent of the PDS, as well as compliance with the regulatory requirements.

Meanwhile, PSE President and Chief Executive Officer Hans Sicat said the signing of term sheet for PDS stake purchase underscored the Exchange's commitment to see a unified equities and fixed income exchange.

"We remain cognizant of the advantages of this consolidation to capital market stakeholders and the Philippine economy and we hope to realize these benefits the soonest possible time," he said in a statement.

For his part, BAP President Nestor V. Tan said the sale of the shares wiould help shape a better capital markets for the Philippines.

"We welcome this opportunity to bring this deal into completion with the PSE. BAP remains supportive of the goal to have a more efficient financial market through this transaction," he said.

The PDS is the holding company that owns the PDEx, the operator of the fixed income exchange. It also owns the Philippine Depository and Trust Corporation which serves as the depository for equities and fixed income securities.

Source: Philippines News Agency