THE Land Bank of the Philippines (LandBank) said it will be releasing within the month its response to the decision of the Philippine Dealing System Holdings Corp. (PDS) to accept the bank’s offer to buy shares from its stakeholders at P360 per share.
LandBank President Alex V. Buenaventura told financial reporters on Wednesday that the bank’s Board of Directors will come out with a response to the PDS’s acceptance on the purchase of its shares at P360 per share, with the bank still doing due diligence.
“[By the] end of next week will be our response to their [PDS] acceptance letter. I was talking to the [finance] secretary that it was supposed to be already signed. Hopefully, by the end of next week,” Buenaventura said at the sidelines of LandBank’s 55th Anniversary at the Philippine International Convention Center.
He explained that LandBank will have to change the amount it has to offer per share, under its share purchase agreement, since the PDS declared on June 28 that it still has dividends amounting to around P600 million.
“Because the P360 [per share] was based on four months ago, so at that time, they have not yet declared P600 million [in] dividends. But now they declared dividends. Our response to their acceptance letter will be a response on what will be the purchase price considering that they have declared dividends,” he added.
The declaration was seen to affect negotiations in a way, since the declaration of the dividends will affect the company’s net asset value. The net asset value is the final value of a mutual fund, which is derived by deducting the fund’s liabilities from the market value of all of its shares and then dividing by the number of issued shares.
“When you make an offer it’s based on the net asset value of the PDS. We made the P360 offer to buy based on the net asset value prior to their declaration of the dividends. They declared P600 million [in dividends] so our response will be most likely lower than P360 [per share]. So what we are buying now is P600 million less of the net asset value; that is where we are taking long to set our revised purchase offer,” he said.
When asked how much the purchase price per share could drop, Buenaventura said that the LandBank Board has yet to finalize the share purchase price, but pointed out that it will be lower than the current offer of P360 per share.
“So the [PDS] net asset value which is being purchased by LandBank shrank, so that’s the situation, we cannot stick to the P360 original offer to buy per share,” he added.
In March this year, LandBank reported that the total acquisition cost of the 66.67-percent common shares of the PDS at P360 per share will reach P1.5 billion.
The Philippine Stock Exchange (PSE), the owner of the equities-trading market, said in the same month that it does not intend to engage the government in a bidding war to buy PDS, the company that owns the fixed-income trading platform.
In January state-owned LandBank said it has started its own due diligence audit of the PDS, days after the PSE made known its plan to acquire the PDS.
LandBank currently owns 1.56 percent of PDS through the Bankers Association of the Philippines, while the PSE has 69.03 percent of the shares after signing a series of share purchase agreements with stakeholders.