Megaworld poised to complete property business consolidation

MEGAWORLD Corp. is completing consolidation of the property business of tycoon Andrew L. Tan under one roof in a move that began nearly a year ago, the company said in a statement attached to a disclosure on May 9, 2014. “Megaworld Corp. has agreed to purchase the 49.20% stake of Alliance Global Group, Inc. in Global-Estate Resorts, Inc. (GERI) for P10.43 billion,” the statement read.

Megaworld is buying 5.405-billion GERI shares for P1.93 apiece “based on the 30-day volume weighted average price of GERI shares as of April 30, 2014,” it added. After acquisition, Megaworld will own 74.96% of GERI, the statement continued, adding this will trigger a mandatory tender offer for remaining GERI shares held by minority stockholders.

Trading of shares of Alliance Global, Megaworld and GERI was suspended for an hour on Friday “to give the investing public sufficient time to digest the above-mentioned material information”. “The acquisition will complete the consolidation under Megaworld of all real estate businesses of Alliance Global which will enable Megaworld to capitalize on real estate opportunities and capture the expected growth momentum of its real estate affiliates,” the statement explained.

Megaworld, which acquired 100% of Suntrust Properties, Inc. last year, also owns 82% of Empire East Land Holdings, Inc. It has more than 30 other subsidiaries and associates, including fellow-listed Travellers International Hotel Group, Inc. which owns an integrated resort complex in Newport City in Pasay City which consists of, among others, hotels with fine dining restaurants, a performing arts theater and a shopping mall. “We are excited that this consolidation will enable us to further capture the growth in the tourism sector through GERI’s projects,” the statement quoted Francisco C. Canuto, Megaworld’s chief finance officer, as saying. GERI is focused on developing tourism estates like the 150-hectare Boracay Newcoast on Boracay Island, the 1,149-ha Twin Lakes in Tagaytay City, the 34-ha Sta. Barbara Heights in Iloilo City and the 561-ha Southwoods City at the boundary of Carmona, Cavite and Biñan, Laguna.

Suntrust focuses on developing residential, including condominium, projects both in and immediately south of Metro Manila, while Empire East develops “affordable” single-detached houses and condominiums, as well as offers commercial, industrial, parking and residential space for lease in Metro Manila. Megaworld itself is a developer of residential condominiums and townships like Eastwood City in Quezon City; Newport City in Pasay City; McKinley Hill, Uptown Bonifacio and Forbes Town Center in Bonifacio Global City; The Mactan Newtown in Lapu-Lapu City, Cebu; and Iloilo Business Park in Iloilo City. It said last May 8, 2014 that it is spending some P8 billion to build five luxury hotels that will provide an additional 2,000 room at the expanded 28.8-ha The Mactan Newtown. It added that it plans to spend P30 billion to develop The Mactan Newtown in the next five to seven years.

Megaworld grew net income by 22% to P9.03 billion -- inclusive of a P760-million nonrecurring gain -- from P7.41 billion in 2012, as operating revenues climbed 19.91% to P32.333 billion from P26.965 billion and operating expense rose 14.99% to P22.782 billion from P19.813 billion. On Friday (May 9, 2014), Megaworld’s shares gained one centavo or 0.21% to close P4.68 apiece from the P4.67 each on Thursday, those of parent Alliance Global rose 20 centavos or 0.66% to P30.40 from P30.20, those of GERI went up two centavos or 1.01% to P2 from P1.98, those of Empire East added one centavo of 1% to P1.01 from P1, while those of Travellers increased by nine centavos or 0.92% to P9.85 from P9.76.  

Source:  Business World