Stock Commentary

UnionBank SRO shares will list today

Merkado Barkada
UnionBank SRO shares will list today

UnionBank [UBP 75.00 ?2.72%] [link] will list the 617 million common shares that it sold to the public as part of the stock rights offering (SRO) that it conducted to fund its Citigroup PH purchase.

UBP’s Friday disclosure summarized the results of the offer; 98% of the SRO shares were purchased in the 1st round of the SRO, with the final 2% purchased in the 2nd round.

The take-up guarantee provided by UBP’s joint underwriters, CLSA and ING, was not needed to sell-out the offer.

Price at P65.81/share, the SRO shares were sold at a 13.5% discount relative to UBP’s Friday close of P75/share, and at a 26.0% discount from UBP’s closing price of P87.61on the day the announcement of the SRO  was made back on March 31.


The listing of the 0.62 billion new SRO shares, when blended with the existing 1.54 billion common shares, should result in an opening price of around P72/share.

That’s just the math of it, though, and as a few recent transactions like this have shown, the “math” of a transaction doesn’t necessarily track with the changes in demand for the stock.

Are investors optimistic about the Aboitiz Family’s huge move to expand its banking business?

The take-up of the 1st round of the SRO certainly shows that there were not many investors that ignored the opportunity to defend their positions in this stock and double down on UBP’s aggressive expansion of its retail banking business.

This isn’t to say that UBP has an easy road ahead of it, and perhaps that whiff of danger is what has led UBP’s stock price to dip marginally underperform the rest of the banking sector since the time over the past few months.

The Aboitiz Family is a savvy group, and I’m sure they’ve done the due diligence to know where the high-friction parts of this integration process might be, and already have a plan to handle those challenges and potential delays.

Taking off my analyst hat for a second, I just love this kind of “hold my beer” corporate acquisition, but will the market feel the same way? 



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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.



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