Ayala, Lucio Tan group confirm bank merger talks

Posted at 11/21/12 11:59 AM

MANILA  (UPDATE) - Shares of Philippine conglomerate Ayala Corp and LT Group of businessman Lucio Tan climbed after their banking units disclosed ongoing talks for a possible merger to create the country's biggest lender. 

Ayala Corp jumped as much as 4.5 percent to a record P486 while LT Group rose as much as 9.7 percent to a three-month high of P13.80. The broader market climbed to a new peak of 5,553.57 points. 

Shares of Ayala Corp. closed at P487.80, up 4.9%, while LT Group closed at P13.34, up 1.21%. The PSEi ended the session at another record high

Trades in both Bank of the Philippine Islands of the Ayala group and LT Group's Philippine National Bank  were suspended on Wednesday after the two banks requested the stock exchange for a trading halt. 

Both BPI, the country's biggest bank by market value, and PNB hit all-time highs of P88.50 and P84.50, respectively, on Tuesday. 

BPI is partly owned by DBS Bank.

BPI said in a statement on Wednesday it was in discussions with the Lucio Tan group for a possible acquisition of a stake in PNB, creating the country's biggest lender by assets and outpacing current top bank BDO Unibank. 

The talks between the country's third and sixth largest banks by assets involve a share swap that would give the Lucio Tan group a 20 percent stake in BPI, while the Ayala group would become the single largest shareholder of PNB, banking sources close to the two groups told Reuters. 

Local newspaper Philippine Daily Inquirer said the two groups may strike a deal valuing PNB at P96 per share, a premium of 14 percent over the stock's closing price of 84.10 pesos on Tuesday. 

PNB is itself in the middle of a consolidation, as it has yet to fully fold in the operations of sister firm Allied Banking Corp. 

PNB has called its senior managers for a meeting, while BPI will be meeting analysts in a closed-door briefing on Wednesday.