SM consolidates retail assets

The securities and Exchange Commission has approved the plan of the SM group to fold all Sy family-owned specialty stores into SM Retail Inc., further enlarging the country’s largest retail enterprise.

In a disclosure to the Philippine Stock Exchange on Tuesday, SM Investments Corp. (SMIC) said that under the deal, over 1,300 retail outlets will be folded into SM Retail in exchange for shares of stock in SM Retail’s expanded net assets.

“The merger is seen to be both value and earnings accretive given the stores’ competitive position, synergies with SM Supermalls and strong growth potential,” SMIC said.

To be merged with SM Retail’s food and department stores are a wide ranging portfolio of leading local brands such as Ace Hardware, Watsons, Toy Kingdom, SM Appliances, Our Home, Baby Company, Kultura, Sports Central and Pet Express.

Together, they operate 1,374 outlets and in 2015 delivered total revenues of P53 billion.

The merger will thus create a retail group with combined sales of P264 billion.

The combined entity will have 1,927 outlets and 2.4 million square meters of gross floor area.

SM Retail will be 77.3- percent controlled by SMIC after the merger, which also simplifies the structure of retail businesses under the group.

Macquarie Capital was the appointed advisor of SM Investments for the merger.

In 2015, SM Retail posted P211.4 billion in sales, up by 7 percent. Net income rose by 17 percent to P6.8 billion for the year.