SMIC tender offer attracts EPCIB minority stockholders

SM Investments Corp. (SMIC), the listed investment holding company of the group of retail tycoon Henry Sy, said minority shareholders of Equitable PCI Bank, accounting for 51.6 percent of the country’s third largest lender, tendered their shares at P92 per share for a total consideration of P34.49 billion.

In a statement issued yesterday, SMIC said a total consideration of 374.9 million shares were tendered, including those of state pension funds Government Service Insurance System (with an ownership of 13.55 percent) and Social Security System (25.84 percent), and other individual shareholders owning 1.34 percent.

SMIC, however, stressed that the participation of the SSS in the tender offer is subject to the resolution of the case pending in the Supreme Court.

The tender offer commenced last Aug. 31 and expired yesterday.

The Sy group owns the single biggest stake of 34 percent in EPCIBank.

EBC Investments Inc., an EPCIBank subsidiary, has also agreed to sell its 78.81 million shares, representing a 10.8-percent stake in EPCIBank, for P7.25 billion.

The transaction is payable over a two-year period. Drawdowns are scheduled on June 2, 2007, Feb. 2, 2008, and Oct. 2, 2008.

Funding for the acquisition would come from a combination of internally-generated funds, sale of assets and borrowings.

SMIC executive vice-president Jose Sio earlier said the company had enough resources to buy out other shareholders of EPCIBank. It said it has cash available for the payment of the first installment on closing date of the transaction.

SMIC has appointed Citibank N.A. as the escrow agent which shall hold the subject shares in escrow until the full payment of the consideration.

The SM Group’s tender offer was in line with efforts to consolidate its holdings in EPCIBank, infuse more funds in the bank to help meet its capital requirements and prepare it for Basle II and other new reporting standards.

The group said it was also keeping its option to merge EPCIBank with another bank to further strengthen the bank’s balance sheet. Such a merger will, however, be subject to the approval of other EPCIBank shareholders and regulators.

A merger between SM banking unit Banco de Oro (BDO) and EPCIBank will create a financial institution that will likely overtake Bank of the Philippine Islands as the country’s second largest bank in terms of assets. Metropolitan Bank & Trust Co. remains the largest in asset terms, but its lead could come under threat as a result of the industry consolidation.

Since its listing in May 2002, BDO has grown steadily, partly through the acquisitions of small bank operations, such as local branches of Singapore’s United Overseas Bank Ltd. and Banco Santander Central Hispano SA of Spain.

The merger will give the SM Group access to EPCIBank’s 227 remittance centers in cities with large Filipino populations, such as San Francisco and Los Angeles. BDO has one remittance center in Hong Kong and receives remittances through alliances with companies outside the Philippines.

BDO’s remittance business has helped boost sales at SM Prime’s malls. In turn, the bank uses its branches at the malls to lure and keep clients.