MANILA, July 23 (Reuters) - Medium-sized lender Philippine Bank of Communications (PBCOM) said on Wednesday businessman-retailer Lucio Co will buy more than a third of the bank for nearly 6 billion pesos ($139 million), the latest in a wave of mergers and acquisitions in the local banking sector.
Co, which owns grocer Puregold Price Club Inc, will buy 181.08 million newly issued common shares of the bank at 33 pesos apiece, a steep discount of nearly half against the lender’s closing price of 64 pesos on Tuesday.
The transaction will give Co’s Union Equities Inc, his vehicle for the purchase, a stake of nearly 38 percent, infusing fresh capital into the bank for an expansion programme it started 18 months ago, PBCOM said in a statement.
“We are in a period of growth and expansion, and we need to fortify our capital base to help us achieve our growth targets,” bank chairman Eric Recto said in the statement.
Puregold’s strong retail network will complement the bank’s thrust to expand its exposure to small- and medium-scale enterprises, Recto added.
The partnership will also increase the bank’s resources to respond to regional competition, PBCOM said, with foreign firms scoping out acquisition opportunities in the country following the passage of a law allowing foreigners to take full control of local lenders.
The transaction will raise the bank’s issued shares by more than 60 percent to 480.6 million shares.
PBCOM, with a current market value of around $440 million, jumped as much as 9 percent when trades resumed in the afternoon session after a morning suspension due to the announcement. It later pared its gains to around 1.6 percent at 65 pesos as of 0646 GMT.
$1 = 43.2800 Philippine Pesos Reporting by Rosemarie Francisco; Editing by Stephen Coates