MANILA, Philippines—The SM group led by tycoon Henry Sy, Sr. confirmed on Thursday that negotiations were going on for its acquisition of a majority stake in the property holding firm of the Ortigas family, one of the biggest landlords in the metropolis.
The Inquirer reported earlier that the SM group was nearing a deal to acquire a majority stake in the privately held Ortigas property group in a transaction worth around $1 billion. The deal is seen as a potential “game-changing” move that will expand the SM group’s urban landbank and give it control of the Ortigases’ crown jewel, the 16-hectare Greenhills shopping center.
“We confirm that the SM group is in the process of discussion for the acquisition of majority interest in Ortigas Holdings Inc. The amount and details of the transaction are still under discussion and subject to finalization,” SM Investments Corp. executive vice president and chief finance officer Jose Sio told the Philippine Stock Exchange.
SM’s shopping mall development unit SM Prime Holdings issued a disclosure with a similar content.
In a separate statement, OCLP Holdings Inc. president Rowell Recinto said, “It is our understanding that some key shareholders are in dialogue and discussion with a prospective buyer but that a deal has not been concluded.”
“In the meantime it is business as usual for the company,” Recinto said.
OCLP Holdings was created when Ortigas & Co. Ltd. was converted from a limited partnership into a corporate entity, a restructuring that paves the way for the entry of a new investor, a stock debut or both. It had taken some time for the Ortigas holding firm to take this corporate route because of the diverse ownership, the old partnership being a very old entity whose shares of stocks had been passed on from one generation to another.
HSBC, the single biggest stockholder of OCLP with a stake of 34 percent, has already signed some documents to pave the way for the sale. There was likewise a critical mass of Ortigas family members who had agreed to the transaction.
An analyst has described this prospective deal as a “game-changer” move that may propel the SM group’s SM Land or SM Development Corp. to the size of Ayala Land Inc. as this allows SM to secure large landbank in a major central business district.
The Ortigas group has a vast urban landbank spanning Mandaluyong, San Juan and Quezon City, the crown jewel of which is the Greenhills shopping center.
SM group patriarch Henry Sy himself, who built a fortune out of retailing and shopping mall development and who now also owns the largest banking group in the country, has aggressively pursued this prospective transaction in the last few years, industry sources said.
According to OCLP’s Web site, the Ortigas estate, once known as the Hacienda de Mandaloyon originally formed part of the estate holdings of the Augustinian Order which covered an area of 4,033 hectares.
In 1920, the Augustinian Fathers sold this property to Frank Dudley and Francisco Ortigas. Dudley later surrendered his interest to Phil Whitaker, and the company became known as Whitaker and Ortigas. In the following years, there were several changes of partners.
In 1931, it was incorporated as a limited partnership among Francisco Ortigas, Vicente Madrigal, B.C.M. Johnston, Fulgencio Borromeo, Clyde Dewitt and Manuel L. Quezon. All the incorporators, except Quezon, who was President of the Philippine Senate at that time, were constituted as managing and general partners while the other shareholders were designated limited partners.
In 1956, Madrigal withdrew from the partnership and the partnership’s name was correspondingly amended to “Ortigas & Co. Ltd.” In 1985, the Ramirez and Lanuza groups of general and limited partners who held 42 percent of the entire partnership’s equity also withdrew from the partnership.