SEC approves merger of SM Prime, SM Land

The Securities and Exchange Commission has approved the merger of SM Prime Holdings Inc. (SMPH) and privately held SM Land Inc. The emerging entity will become Southeast Asia’s largest real estate firm.

With the union of the property units of taipan Henry Sy, several unlisted assets under SM Land, such as 40 hectares of Pico de Loro leisure estate in Hamilo Coast and the 60-hectare land on which the Mall of Asia complex stands on, will be infused into SM Prime.

With this merger, the property firm will have completed the second of three steps needed to consolidate key SM property units into a single publicly listed vehicle under SMPH—a transaction the Sy group wants to wrap up before the end of this year.

In a disclosure to the Philippine Stock Exchange yesterday, SMPH said that, apart from the merger with SM Land, the SEC approved the amendment in SM Prime’s articles of incorporation to double the authorized capital stock to P40 billion, from P20 billion, and to change the property firm’s primary purpose to a mixed-use property developer.

Also, SMPH secured the SEC’s approval for the issuance of common shares for the merger with SM Land. The proceeds will fund the purchase of shares in various real estate companies. Shares will be issued to parent firm SM Investments Corp. in exchange for various real estate properties.

The third and final step in the consolidation is SM Prime’s acquisition of specific real estate companies and assets currently held by the Sy family’s holding firm SM Investments Corp. (SMIC) in exchange for new shares in SM Prime. The consolidation has an estimated transaction value of P279 billion.

Through a tender offer to minority shareholders, SM Land earlier cemented a controlling interest in two public-private SM-led property firms—SM Development Corp. and Highlands Prime Inc. It used shares in SMPH as currency to pay for its purchase of shares in SMDC and HP.

Meanwhile, the increase in SMPH’s capital is meant to beef up its balance sheet to absorb affiliate real estate companies.

The enlarged SMPH will be chaired by Henry Sy Jr., with patriarch Henry Sy Sr. as chair emeritus. Hans Sy and Jeffrey Lim will remain as president and chief finance officer of the enlarged SMPH.

From this consolidation, an integrated real estate company will emerge, allowing it to undertake larger projects where all its business units will be involved.