SEC approves retail merger in SM Group

MANILA, Philippines – SM Investments Corp. (SMIC), the holding company of the Sy family has obtained the green light from the Securities and Exchange Commission to consolidate all retail-related businesses into SM Retail Inc.

Over 1,300 retail outlets will be folded into SM Retail in exchange for shares of stock in SM Retail’s expanded net assets, SMIC said in a disclosure to the Philippine Stock Exchange (PSE) yesterday.

Among those to be merged with SM Retail’s food and department stores are leading household brands in SM stores such as Ace Hardware, Watsons, Toy Kingdom, SM Appliances, Our Home, Baby Company, Kultura, Sports Central Pet Express and other specialty retailers.

There are 1,374 outlets of these brands which registered P53 billion in total revenues.

“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.

It tapped Macquarie Capital as for the merger.

The merger will complement the existing retail portfolio of SM Retail Inc., which includes 53 SM department stores, 44 hypermarkets and 213 supermarkets as well as majority stakes in the local operations of Alfamart, Forever21, Crate & Barrel and other specialty and apparel retailers in addition to a minority stake in Uniqlo.

Post-merger, SM will own 77.3 percent of the enlarged SM Retail Inc.

Company officials said the merger adds both greater diversity and a more extensive footprint to SM Retail’s portfolio and is consistent with the group’s goal of simplifying its corporate structure.

“It is similar to the consolidation we undertook in 2013 to create our large-scale, mixed-use property business,” SMIC said.

With the merger, SM Retail will be even better positioned to address the growing needs of Filipino consumers and we expect the merger to be accretive to SM Retail earnings in future years.

SM’s retail operations has a strong brand franchise consisting of non-food under the SM store and food under SM Markets comprising of SM Supermarket, SM Hypermarket, and Savemore and other food retail stores under Waltermart and Alfamart.

SM’s property arm, SM Prime Holdings Inc., meanwhile, is the largest integrated property developer in the Philippines with interests in malls, residences, offices, hotels and convention centers as well as tourism-related property developments.

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