Property giant Ayala Land Inc. (ALI) seeks to expand its nationwide portfolio by buying about P17.4 billion worth of real estate assets from its parent conglomerate and controlling shareholder group using its own shares as currency.
In exchange for an array of assets, ALI will issue 311.58 million new common shares at P55.80 per share to Ayala Corp. (AC) and its controlling shareholder group, Mermac Inc. AC will get about 309.6 million new shares while Mermac will subscribe to 1.98 million new shares.
AC, ALI and Mermac aim to consummate the transaction within the year, afterwards boosting AC’s stake in ALI which will increase to 47.2 percent from 46.07 percent.
The most valuable among the assets to be infused is AC’s 50 percent ownership in Ayala Hotels Inc., owner of the Manila Peninsula property and ALI’s partner in Ayalaland Premier’s Park Central Towers Project in Makati City. The 19,858-square meter Manila Peninsula property and the 209,808-sqm Park Central Towers are together valued at about P13.2 billion.
This acquisition is seen to unlock a prime development opportunity in Makati central business district.
Land and office space
AC is likewise selling its 100 percent ownership in Darong Agricultural and Development Corp., and AC’s three lots in the same area in Darong, Sta. Cruz, in Davao del Sur covering an area of about 633 hectares. These assets were valued at P1.72 billion.
AC and Mermac are also selling their office units and parking slots at Tower One’s 32nd to 35th floors, where each floor is 62.65-percent owned by AC and 37.35-percent by Mermac. These assets have an area of 5,162 square meters valued at P1.39 billion.
Furthermore, AC is turning over its 6,019-sqm Honda Pasig property in Barangay Bagumbayan along C5 road for P993 million. This is seen as a residential development opportunity for Avida.
The last asset included in this deal is AC’s 11.74-hectare Calauan property in Laguna valued at P78 million. This is to “expand socialized housing presence for BellaVita in Southern Luzon.”
‘Natural owner’
“We are delighted about this transaction. We view ALI as the natural owner of these properties and is in the best position to optimize their value. In addition, this deal is consistent with Ayala’s initiative to increase its ownership of ALI, similar to the block purchases of ALI shares we have done over the past year,” Fernando Zobel de Ayala, AC president and CEO and ALI chair said in a disclosure to the Philippine Stock Exchange on Friday.
“We are pleased with our agreement with Ayala Corp. to purchase properties in exchange for ALI shares. These properties are in key locations and will further expand our landbank and commercial assets. We are confident that the inclusion of these assets will further create value for our stakeholders,” said ALI president and CEO Bernard Vincent Dy.
The shares to be issued will come from ALI’s unissued shares, which are not subject to preemptive rights and do not require stockholders’ approval under ALI’s articles of incorporation.
In 2014, shareholders of ALI approved a 1-billion share carve-out plan, that earmarked shares that could be sold in the future. The shares to be issued will come from the 515.15 million unissued shares out of the plan.
FTI Consulting Philippines Inc., an independent firm, undertook the valuation report and concluded that the transaction was “fair from a financial point of view.”