By Jenniffer
B. Austria | Posted on Jun. 01, 2013 at 12:02am |
[
manilastandardtoday.com ]
Billionaire
Henry Sy is merging its property units and assets under SM Prime Holdings Inc.
in a move to create country’s largest property firm with a market
capitalization of $14 billion (P588 billion).
SM
Investments Corp. and SM Prime Holdings Inc. said in separate disclosures to
the stock exchange their respective boards of directors approved the merger via
share swap transaction.
The group
said under the plan, SM Land, the private property unit of the Sy family, would
offer existing SM Prime shares for the outstanding stocks of listed SM
Development Corp. and Highlands Prime Inc.
The group
said after the completion of the exchange offers, the second step involved the
merger of SM Land with SM Prime, with the latter as the surviving entity.
Henry Sy Jr.,
who will become chairman of the merged entity, said the consolidation aimed to
create an integrated real estate company, which would allow the merged entity
to undertake larger projects.
“The
consolidation will give us the scale, the right organization, the agility and
resources that will allow us to participate in highly attractive opportunities
that go with stronger macroeconomic environment,” Sy Jr. said.
SMDC is the
real estate unit of SMIC while HPI is a developer of high-end properties within
Tagaytay Highlands. Both companies will be delisted from the stock exchange
following the merger.
SM Prime, the
largest shopping mall operator, is poised to surpass Ayala Land Inc.’s P465.6-billion
($11 billion) market capitalization. The move will also allow SM Prime to
pursue bigger projects, backed by the group’s experience in developing malls,
homes, offices and resorts, it said.
“This
consolidation is clearly intended to rationalize the group’s property
business,” James Lago, head of research at PCCI Securities Brokers Corp., said
before the announcement. “On the one hand, you have property sales that are
explosive and volatile and rental income, at the other, which is steady and predictable.”
SM
Investments, SM Prime, SM Development and Highlands sought a trading halt
Friday. Trading of Sy-owned stocks would resume Monday.
SM Prime said
it would acquire specific real estate companies and assets currently held by
SMIC in exchange for new shares in SM Prime. One of the assets to be acquired
is the 60-hectare Mall of Asia complex in Pasay City.
SM Prime
chief finance officer Jeffrey Lim said in a presentation the consolidation
would boost the company’s landbank to 920 hectares from 110 hectares while
assets would increase to P284 billion from P148 billion.
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