If you’re not selling, don’t be afraid of Dennis Uy

The Zobels should not worry about their kingdom that is Ayala Corp. (AC) and its subsidiaries. Even First Pacific Co. Ltd. should not fear Dennis Uy, who may now be considered the new takeover king of companies that have either their common or non-voting preferred shares listed on the Philippine Stock Exchange (PSE).

Uy and his family pose no threat to either AC or Mermac Inc., AC’s principal stockholder, or First Pacific. The public stockholders of the Zobel-owned holding company would never betray them because they actually own only a very small portion of outstanding AC common and non-voting preferred shares.

Who among Antonio Jose U. Periquet, Ramon R. Del Rosario and Xavier P. Loinaz, who are all listed on PSE website as independent directors (ID) would say no to the Zobels? Should they go against the wishes of Jaime Augusto Zobel de Ayala and his younger brother, Fernando Zobel the Ayala, who, according to PSE website, are the chairman and vice chairman of the board, respectively, they would cease to be AC’s IDs.

As IDs, Periquet, Del Rosario and Loinaz were among the beneficiaries of the Zobels’ generosity when the company’s seven-person board received P26.7 million in 2017, or a little over P3.814 million each in that year.

The computation was based on their “total annual compensation during the preceding fiscal year” which amounted to P26.7 million, or 0.00535 percent of net income of P49.867 billion in 2017.

As of May 22, 2019, AC reported 873,825,042 under “change in the number of common stock outstanding and amount of debt outstanding” as outstanding shares. The company divided its outstanding capital stock into 626,825,042 outstanding common shares; 20 million outstanding preferred B Series B 2 shares; 27 million preferred series B 2 shares; and 200 million voting preferred shares.

Computations

As the Zobel family’s holding company, AC could not possibly be taken over by Dennis Uy, the takeover king from Davao City. Its public stockholders would never allow him to buy them out.

This despite a public ownership report (POR) as of March 31, 2019, which made them AC’s majority stockholder with 303,319,205 common shares, or 52.38 percent of 630,630,686 outstanding common shares. This ownership should have been computed against AC’s entire outstanding capital stock. As stated in the POR, the report was based only on outstanding common shares.

For the sake of AC’s public stockholders, their ownership of 52.38 percent of outstanding common shares should be computed based on outstanding capital stock. This is not to admit that the public are AC’s majority stockholder. Definitely, they are not and will never be. Owning 52.38 percent of outstanding common shares would be too big for them to own and would have taken away from the Zobels their majority ownership.

In the first place, it is impossible for AC’s public stockholders to own so much when they don’t even have a board seat. Translated, their 52.38 percent of 7, which is the number of directors, could have entitled them to 3.6666 directors.

It is unfortunate that, instead of allowing the public to elect their own directors to AC’s seven-person board, the Zobels preferred to appoint three independent directors.

On May 27, 2019, AC common shares opened trading at P903.50, hit a high of P904, dropped to a low of P891.50 and closed the session at P902. The stock peaked at 30-day high of P924 and a 30-day low of P838.

Ownership profile

Philippine National Bank (PNB) reported in a general information sheet (GIS) 1,750,000,001 as authorized capital stock (ACS) of which it said 2,402,065,086 PNB common shares are held by 37,254 stockholders. Of 37,254 stockholders, 37,149 Filipinos owned 1,152,925,408 PNB common shares, or 92.30 percent, while 105 foreigners held 1,249,139,678 PNB common shares.

While foreigners could own a maximum of 40 percent of outstanding, they held only 96,214,270 PNB common shares, or 7.702 percent of 1,249,139,678 outstanding PNB common shares.

Of course, the division between Filipino and foreigners’ ownership is not correct. Perhaps, the website of the Philippine Stock Exchange (PSE) is right that PNB has 1,249,139,678 outstanding common shares. Incidentally, the same number was attributed as being owned by Filipinos when it was the bank’s outstanding common shares.

While PSE website showed 1,249,139,678 as outstanding PNB common shares, it has 825,177,178 listed common shares, or 66.06 percent of outstanding. As a listed stock, PNB said in the website that it had a free-float level of 21.02 percent, which would be equivalent to 262,259,160 PNB common shares.

On May 27, 2019, PNB common shares opened trading at P59, the stock’s session high, dropped to a low of P58 and was last traded at P58.40. The bank’s common shares recorded a 30-day high of P59.40 and a month’s low of P49.30.

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