Robinsons Retail Holdings, Inc. (RRHI) informed the Exchange that its Board of Directors has approved the acquisition of a 4.4% stake in Bank of the Philippine Islands (BPI) held by Arran Investment through Liontide Holdings, Inc. The transaction amount was not disclosed, as the mechanism of the acquisition will be through Preferred Shares of Liontide which are redeemable into equivalent BPI shares.<\/p>\n\n\n\n
This recent acquisition would be in addition to the 2.4% stake that RRHI would get as part of the merger between Robinsons Bank and BPI, which was agreed upon by the parties late last year. To recall, BPI, RRHI, and JG Summit Capital Services Corporation agreed to a merger of Robinsons Bank and BPI which would result to RRHI and JG Capital holding 2.4% and 3.6% of BPI\u2019s outstanding capital stock. The merger is currently pending approval from SEC, PDIC, BSP, and PCC.<\/p>\n\n\n\n
We see this as a win-win for all parties. There have been rumors that Arran is looking to monetize its minority stake in BPI, and the potential overhang has made market players cautious of a surprise private placement. RRHI\u2019s acquisition will lift the overhang, and open up RRHI\u2019s ecosystem of consumers and suppliers as a new market for BPI to cross-sell its financial products. <\/p>\n\n\n\n
On the other hand, RRHI will also benefit from a steady stream of dividends from its BPI shares, which usually declares semi-annual dividends totaling around P2.00 per share per annum. Looking at the bigger picture, this transaction will give the JG Summit Group a total stake of 10.4% in BPI, which will give the Group a bigger say in the bank. <\/p>\n\n\n\n
This could increase synergies between BPI clients and the broader JGS ecosystem, which includes RRHI, URC, RLC, and CEB. For example, BPI could offer promos to credit card holders which would push its customers towards RRHI and CEB, or preferential rates on home loans for clients looking to acquire property through RLC.<\/p>\n\n\n\n
To summarize, we see this more as a synergistic acquisition rather than a financially-driven one that would have a significant direct effect on RRHI\u2019s bottom line. RRHI has scheduled a briefing with investors and analysts on Monday, where we would hopefully learn more details about the transaction and its implications on the listed companies involved.<\/p>\n\n\n\n