BDO Unibank Inc., the listed banking arm of the SM Group, has completed the acquisition of the largest rural bank in Mindanao in a bid to grow its presence in the region in line with its expansion target.
In two separate disclosures to the stock exchange, BDO said it secured a share swap with One Network Bank Inc. (ONB) on Tuesday for 99.59 percent outstanding capital stock in the rural bank, amounting to 247.37 million ONB common shares.
Under the share-swap agreement, BDO will pay ONB shareholders by crossing 64.49 million common shares and issuing “an equal number of new shares in a top-up and borrowing transaction with a substantial BDO shareholder.”
This will equate to a swap of 0.2618 BDO share per one ONB share.
In closing the buyout, BDO will conduct a tender offer to ONB minority stakeholders in accordance with corporate laws, as ONB stands as a public company with over 1,700 shareholders.
“[The ONB buyout is for] expansion of distribution network, accessing new market segments in Mindanao and Panay Island,” BDO said.
“The ONB acquisition expands the regional presence of BDO in the country, particularly in its target market in the southern Philippines and opens up business lines for BDO,” it added.
ONB is one of the largest rural banks in the regions with 98 active branches focused in Mindanao.
The Sy-led bank has been mostly acquisition-oriented last year as it targets to further grow its network. For this year, the bank earlier said it plans to grow more organically, looking at opening at least 50 more branches this year to add on its network of over 800 branches and 2,600 automated teller machines nationwide. BDO also has a branch in Hong Kong and 29 others of remittance and representative offices across Asia, Europe, North America, and the Middle East.
BDO is targeting net income of P25.1 billion for 2015, up from P22.8 billion in 2014, through a combination of organic growth and acquisitions.
At the end of the first quarter, the bank said its net income grew 12 percent from a year earlier to P6.1 billion, boosted by income from loans and deposits. Its loan portfolio went up 15 percent to P1.1 trillion while total deposits advanced 12 percent to P1.5 trillion. Fee-based income reached P4.3 billion in the quarter.
BDO is the banking arm of Henry Sy, the richest man in the Philippines, under the SM Group via holding firm SM Investments Corp.