that it was amenable to a renegotiation of the share price, saying that it was willing to pay more for the SSS stake. Subsequent acquisitions of common shares on the Philippine Stock Exchange have boosted the stake of the SM group to 34% as of January 9, 2006, making it the single largest shareholder in the bank. Banco de Oro's gambit On January 6, 2006, Banco de Oro offered to buy the rest of Equitable PCI for 41.3 billion pesos through a share swap option, with Banco de Oro as the surviving entity. Under the deal, every one Equitable PCI share would be swapped for 1.6 Banco de Oro shares or, in a second option, an independent accounting company would determine the swap ratio on the book values of both banks under International Accounting Standards. If approved by two-thirds of Equitable PCI shareholders, this "merger of equals" would create the second-largest bank in the Philippines, putting Banco de Oro, the survivor of the merger, just below Metrobank but dislodging Bank of the Philippine Islands (BPI) from the spot. Equitable PCI has been given a deadline of January 31 to consider the deal. If the deal is approved by the Equitable PCI board, all stakes will be diluted as the SM Group's stake increases. However, the GSIS and Romualdez were still opposed. In fact, a counterproposal was even considered by Romualdez in which a merger would occur, but with Equitable PCI as the surviving entity, rather than Banco de Oro. So far, this counterproposal has not been as hot a topic as a merger with BDO as the surviving entity. International analysts see otherwise. Standard & Poor's says that if the merger deal succeeds, Equitable PCI's debt rating could rise, while Banco de Oro's ratings will remain unchanged. Equitable PCI's debt rating is currently a B, five notches below investment grade. Banco de Oro has a B+ rating. UBS claims that Equitable PCI shareholders should find the deal attractive and also hails the deal as a "win-win situation" for both banks. It also claims that under the current timeframe, the merger will also benefit Equitable PCI since it would increase its capital adequacy ratio (CAR) without having it raise more capital, making the deal timely under IAS. It also claims that the share price of Equitable PCI would increase to as much as P73.60 under the deal, more than the fair