Billionaire Sy’s SM Rises on Property Merger Plan: Manila Mover

SM Investments Corp., Philippine billionaire Henry Sy’s holding company, climbed to a record after it said it may merge its property units, which could unseat Ayala Land Inc. as the nation’s largest developer.

SM Investments is studying a proposal to merge units including SM Prime Holdings Inc., Vice Chairman Teresita Sy-Coson said in a mobile-phone message response to queries. The plan isn’t “finalized yet in terms of what companies will be included,” she said.

Combining Sy’s property units will give the 88-year-old tycoon a builder that’s ahead of Ayala Land in sales and market value, according to data compiled by Bloomberg. A bigger property unit will help Sy compete with Ayala Land, a developer with investments from offices, malls to apartments.

“This move is a tacit admission that Ayala Land’s strategy as diversified developer is better than SM’s approach of fragmented units focusing on specific real estate segments,” James Lago, head of research at PCCI Securities Corp. in Manila.

Shares of SM Prime rose 1.1 percent to 19.50 pesos at the end of trading in Manila, a record. SM Investments climbed 0.7 percent to 1,007 pesos, also its highest close. Highlands Prime Inc., a developer of a mountain resort south of Manila, surged 28 percent while SM Development Corp., a residential builder, jumped 3.9 percent.

Control Clash

Ayala Land and Sy’s group clashed for control over a property company owned by the Ortigas family in the Philippines. The two groups also fought over the development of a 7.7-hectare (19-acre) state-owned property in Bacolod City in 2011.

“A diversified SM property builder will give Ayala Land a stronger competitor,” Lago said. “Sy will have a developer with stable earnings -- it will get a steady income stream from the malls’ rental earnings and income from the development and sale of property, which is subject to market cycles.”

Sy’s other publicly-listed property ventures also include Belle Corp., which is building a Manila casino in partnership with Melco Crown Entertainment Ltd. He also owns privately held SM Land Inc., which developed offices for call centers, the 67-hectare Mall of Asia complex in Manila and a 5,800-hectare tourism resort project in Batangas, a province south of Manila.

Sy’s listed property companies are worth a total 501.9 billion pesos ($12 billion), leapfrogging Ayala Land’s 442.13 billion peso market value, according to data compiled by Bloomberg.

SM Prime, the nation’s largest shopping mall operator, and SM Development had 52.33 billion pesos in combined sales in 2012, compared with Ayala Land’s 49.9 billion revenue. SM Prime had 10.53 billion peso in profit last year compared with Ayala Land’s 9.04 billion peso net income.

Sy, who migrated from China in 1936, is the Philippines’ richest man and ranks 63 worldwide with $14.3 billion estimated net worth, according to Bloomberg Billionaires Index. The Philippine Daily Inquirer and Philippine Star first reported the plans to merger the property units.