July 22, 2015

BDO completes acquisition of ONB

In a disclosure to the Exchange, BDO Unibank (BDO) said that it has completed the acquisition of One Network Bank (ONB), a rural bank with 98 active branches in Mindanao. The acquisition was completed via a share swap transaction which allowed BDO to acquire 99.59% of ONB.

In payment, BDO crossed 64.499m common shares of BDO from a controlling BDO shareholder to the selling ONB shareholders, while also issuing an equal number of shares from its unissued capital stock to complete the top-up and borrowing transaction. BDO will also conduct a tender offer to the minority shareholders of ONB.

Our take: The acquisition of ONB will allow BDO to fast-track its expansion in Mindanao, especially considering that ONB has an established presence and a wide branch network in the region. This is consistent with BDO’s plans of expanding in provincial growth areas.

According to the bank’s management, BDO will keep ONB as a standalone entity but will likely upgrade its status to a thrift bank from its current status as a rural bank. At BDO’s current price, the share swap transaction implies an acquisition price of P6.8b and is equivalent to 1.8% of BDO’s expanded capital base. We believe that the dilution is negligible considering ONB's wide branch network and established presence in the Mindanao region. – WealthSec