Proxy war for control of Ortigas Holdings looms

MANILA, Philippines – Two of the country’s corporate giants and market heavyweights, SM Investments Corp. and Ayala Corp., are showing no signs of backing down in the face of a looming proxy war for control of the property holding firm of the land-rich Ortigas family whose crown jewel is the 16-hectare Greenhills shopping complex.

Informed sources said the camp of retail tycoon Henry Sy has found an ally in the group led by Fernando Ortigas (FOG) which owns a combined 43 percent of OCLP Holdings Inc. FOG nominated two representatives from the SM Group – BDO Unibank corporate secretary Edmundo Tan and BDO Unibank corporate information officer Elmer Serrano during OCLP’s board meeting last Aug. 23, effectively giving the Sys a voice or foothold in the property holding firm’s business decisions.

The Ayala conglomerate, however, remains unfazed by this new development as it has the backing of businessman Ignacio Ortigas, the other faction within the Ortigas family.

ALI president Antonino T. Aquino said the Ignacio group has aggregate shareholdings of 47 percent in OCLP, still bigger than FOG’s.

Analysts said a proxy battle is in the offing with the contending parties deadset on bagging the right to own and develop the Ortigas clan’s massive landbank spanning San Juan, Quezon City and Mandaluyong.

The two remaining minority blocks that could provide the swing votes for decisions including changes in management are the Roman Catholic Archbishop of Manila with a 6.7 percent stake and Li Seng Giap & Sons Inc. with more than 2.5 percent.

The Chuch, however, maintains a neutral stance with respect to the internal wranglings within OCLP.

A proxy fight is a technique used by an acquiring company to attempt to gain control of a takeover target. It occurs when a corporation’s stockholders develop opposition to some aspect of the corporate governance.

The insiders launch their own drive to fortify their voting strength by soliciting support from third parties.

For minority stockholders whose votes if counted separately would hardly matter, proxies provide the opportunity to pool their shares to be able to elect one of their own to the board of directors.

Both the Ayalas and the Sys are in a race to secure a deal with the critical mass of the Ortigases who remain divided as to the future direction of OCLP.

The SM Group negotiated to purchase HSBC’s shareholdings ahead of ALI, but the Ortigases decided to consolidate control of OCLP within the family and exercised their right of first refusal over the said shares. The shares were distributed on a pro-rata basis among the two warring groups.

Acquiring control of OCLP, one of the biggest landlords in Metro Manila, will allow the SM Group to corner the lion’s share of the retail market in the burgeoning Ortigas-Pasig-Mandaluyong area.

Should ALI succeed in its bid to take over OCLP, it would mark the group’s first foray into the Ortigas/San Juan area and fortify its goal as the biggest master-planned community developer in the country.