Sy withdraws merger offer to Equitable PCI

BY Ma. ELISA P. OSORIO, BusinessWorld Reporter Banco de Oro Universal Bank of mall magnate Henry Sy has withdrawn its "merger of equals" proposal to Equitable PCI Bank, a ranking official of the SM Group said. "The merger is off the table," the official who refused to be named said in a telephone interview. The comment was made after BusinessWorld sought the reaction of the bank on a statement issued by Equitable PCI calling for the banking arm of the SM Group to up its merger offer given the rising market price of Equitable PCI. In its merger offer, Banco de Oro priced Equitable PCI shares at an estimated P56 apiece. Equitable PCI shares have been trading above P75 in the past few days. They closed at P77.50 per share onWednesday. The official said the directors of Equitable PCI have not even discussed the merger proposal other than to say that the board will formulate a team to study the offer. Of the 15-man board, three seats are sure to nix the merger offer, industry observers said. These three seats are those held by the two nominees of the Government Service Insurance System (GSIS): GSIS Chairman and General Manager Winston F. Garcia and Reynaldo Palmiery; and Trans Middle Equities’ Ferdinand Martin Romualdez. Banco de Oro President Nestor V. Tan said it was premature to discuss his bank’s January 6 offer to swap 1.6 Banco de Oro shares for every Equitable PCI share. "We do not even know if the shareholders of [Equitable PCI] are willing to consider a merger," Mr. Tan stated in a text message sent to BusinessWorld. A member of the Equitable PCI board said it would be "crazy" for the bank to accept the original offer. "At current market prices, it is crazy if you look at it mathematically," the board director said. "There will be no merger unless they make another offer," the director added. However, Mr. Tan said the Equitable PCI shares were trading "on speculation" and was buoyed by reports that GSIS has an investor willing to buy its stake in the bank for P95 per share. According to him, Banco de Oro’s final offer will be based on "the actual financial positions of both companies and not on the impact of speculation." Meanwhile, Banco de Oro on Wednesday said it has completed the integration of the 66 branches it acquired from United Overseas Bank -- Philippines. In a regulatory filing, Banco de Oro said it has converted 31 branches, relocated four and consolidated the remaining 31 into existing branches, for redeployment over the next 12 to 18 months. This brings the Sy-led bank’s current network to 220 branches from 185 as of December 31, 2005. With the eventual redeployment of the 31 branch licenses, Banco de Oro’s branch network will be further increased to 251 branches. Banco de Oro in May 2005 signed a memorandum of agreement with United Overseas Bank to acquire all but one of the latter’s bank branches.