By Tyrone Jasper C. Piad & Elijah Felice E. Rosales
The sale of 88.84 percent of the total outstanding capital stock of BDO Leasing and Finance Inc. from BDO Unibank Inc. and its subsidiary BDO Capital & Investment Corp. received a regulatory nod from the Philippine Competition Commission (PCC).
In a commission decision on Tuesday, the PCC authorized Vittorio P. Lim, Victor Y. Lim Jr. and Luis N. Yu Jr. to carry on with their transaction with BDO Leasing. The troika of investors is acquiring a bulk of the latter firm through a share purchase agreement.
“Upon review of the findings and recommendation of the Mergers and Acquisitions Office and the Parties’ submissions, the Commission finds that the proposed acquisition by the Lims of shares in BLFI … will not likely result in substantial lessening of competition,” the competition regulator said.
The buyout had to be reviewed by the antitrust agency because the transaction met the notification threshold for mergers and acquisitions.
PCC said there were no horizontal overlaps between the parties’ business activities. No vertical relationships between the parties are also seen after the transaction, it added.
Further, the PCC found the sale of the subsidiary is part of BDO’s restructuring in response to new regulations on lease transactions and, thereby, portfolio adjustments.
Business nature
IN January, parent firm BDO Unibank Inc. said it was selling its 88.54-percent stake to third-party investors as it restructures its leasing business.
Yu is acquiring 33-percent ownership while the Lims are buying a total of 37-percent stake. The remaining 18.54 percent is for third-party buyers.
The value of the transaction is equivalent to the sellers’ pro-rata share in the net asset value of the company as of closing date, estimated at P5.451 billion, and premium of P500 million.
In July, BDO Leasing said that its stockholders approved the amendment of the company’s corporate name to United Platinum Holdings Corp. as it seeks to change the nature of business to a holding firm from leasing and financing.
The bank’s net earnings reached P81 million in the first half, which is significantly higher than the P29-million loss year-on-year. The lender attributed the spike in profits to “successful measures implemented to address margin compression.”
Gross revenues reached P1.3 billion in the first semester as lease and loan receivables slipped by 23 percent. This was due to the sale of a portion of the lower yielding portfolio in a bid to cushion margin compression impact and implementation of new accounting standard on leases.
Business nature
Sellers BDO Unibank and BDO Capital are a full service universal bank and investment house, respectively, in the Philippines. BDO Unibank is engaged in consumer lending, deposit taking, credit cards, foreign exchange, remittances, brokering and investments and cash management services.
On the other hand, BDO Capital is in the business of securities trading and underwriting, loan syndication, debt and equity placement, as well as financial advisory.
The acquired entity BLFI is a publicly-listed firm that provides leasing and financing products to commercial clients. It is engaged in direct leases, real estate leases and sale and leasebacks
in the Philippines.
PCC mandate
The PCC is mandated under the Philippine Competition Act to review mergers and acquisitions that meet its thresholds to make sure such transactions are in line with consumer interests.
To date, the PCC has received 215 notifications for mergers and acquisitions with a combined value of P3.85 trillion. Of this, the antitrust body approved 197 and ruled against one transaction.
According to the agency, five notifications with a total worth of P49.3 billion were filed before it since its new guidelines specific for the quarantine period took effect on May 18.
In a televised interview in July, PCC Chairman Arsenio M. Balisacan said his agency is assessing how the markets are responding to the coronavirus pandemic, as well as the quarantine restrictions. Balisacan explained it is expected for some firms “to merge in times of crisis like this” in order to survive the decline in capital, profits and manpower.