SM confirms $1-B Ortigas buyout talks

The company of the country’s wealthiest man Henry Sy Sr. is poised to become the dominant property developer with a $1-billion bid to acquire a majority stake in the Ortigas property group.

The SM group on Thursday confirmed there were ongoing discussions to take over the property holding firm of the Ortigas family—a key developer whose crown jewel is the 16-hectare Greenshills shopping center.

The deal is expected to push up SM’s property business and be at par with dominant player Ayala Land Inc.

“We confirm that 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.

“It is our understanding that some key shareholders are in dialogue … with a prospective buyer, but that a deal has not been concluded,” OCLP Holdings Inc. president Rowell Recinto said in a separate statement. “In the meantime it is business as usual for the company.”

OCLP Holdings was created in April 2010 when the Ortigases’ property holding firm Ortigas & Co. Ltd. was converted from a limited partnership into a corporate entity—a restructuring that paved the way for the entry of a new investor, a stock debut or both.

According to industry sources familiar with the transaction, SM group has so far obtained consent to buy shares from at least 60 percent of the Ortigas group’s shareholders. This includes British banking giant HSBC, the single biggest stockholder of OCLP with a stake of around 34 percent, as well as the Ortigas clan led by Francisco Ortigas III, a former ambassador to Mexico, which holds a 29-percent stake.

But a potential deal-breaker is a faction of the clan led by Ignacio Ortigas, which holds a combined stake of 29 percent.

This faction holds the right of first refusal, and has yet to approve the proposed transaction, industry sources said.

But Ignacio Ortigas’ bloc is said to be willing to sell at their desired price or may later decide to bring in another group that can potentially outbid the Sy family.

“After the transaction, SM will control the lion’s share of the retail market in the Ortigas area with Megamall and Greenhills under its control. Although we do not have the exact amount of land controlled by Ortigas, we believe the acquisition will give SM access to a large landbank in Mandaluyong, San Juan, and Quezon City, which will support the group’s aggressive expansion strategy in Metro Manila,” said a research comment by leading online stock brokerage CitisecOnline.