Tan consolidates real estate assets

MANILA, Philippines - Megaworld Corp., the flagship property unit of tycoon Andrew L. Tan, is acquiring a majority stake in affiliate Global-Estate Resorts Inc. (GERI), completing the consolidation of the billionaire’s real estate assets under a single brand.

In a regulatory filing, Megaworld said it agreed to buy parent firm Alliance Global Group Inc.’s 49.20-percent stake in tourism estate developer GERI for P10.43-billion.

“We are excited that this consolidation will enable us to further capture the growth in the tourism sector through GERI’s projects. The exposure to the tourism industry will also complement our leadership position as the number one landlord and developer of office spaces in the Philippines, specifically for information technology-business process outsourcing companies,” said Megaworld chief finance officer Francisco Canuto.

“The acquisition is set to complete the consolidation of all real estate businesses of AGI under the Megaworld brand, enabling the company to capitalize on real estate opportunities and to capture the expected growth momentum of its real estate affiliates,” Megaworld said. The transaction will also increase Megaworld’s landbank to more than 3,900 hectares.

Under the agreement, Megaworld will buy the GERI shares at P1.93 per share, which is based on the 30-day volume weighted average price as of Apr. 30. The offer price is supported by a fairness opinion and valuation report issued by Navarro Amper & Co.

After the acquisition, Megaworld will own 74.96 percent of GERI. Hence, Megaworld is required to conduct a mandatory tender offer for the remaining GERI shares held by minority stockholders.

A mandatory tender offer is triggered when an investor buys more than 35 percent stake in a public firm. The acquiring entity should then offer to buy all shares held by minority stockholders, which are given the chance to exit the company.

GERI is the country’s leading tourism estate developer. It is the company behind the 150-hectare Boracay Newcoast in Boracay Island; the 1,149-hectare Twin Lakes in Tagaytay; the 170-hectare Sta. Barbara Heights in Iloilo; and the 561-hectare Southwoods City in the boundary of Carmona, Cavite and Binan, Laguna. In 2013, net income of GERI rose nearly 10 percent to P321.39 million from P294.17 million in 2012 while consolidated revenues climbed by more than a quarter to P1.75 billion from P1.39 billion.