Ayala Land sells 28% stake in Makro for P1.019 billion

Property giant Ayala Land Inc. has sold to its joint venture partners its 28-percent stake in wholesaler Pilipinas Makro Inc. for P1.019 billion, the company told the Philippine Stock Exchange.

ALI senior vice-president and chief finance officer Jaime Ysmael said the company’s interest was sold to companies affiliated to SM Investments Corp. and Dutch retailing giant Orkam Holding Asia N.V. (formerly Makro Holding Asia N.V.). The deal was closed yesterday.

Ysmael said the divestment of ALI’s shareholdings in Makro was in line with efforts to refocus on its main line of business to take advantage of the expected upturn in the real estate market. ALI has been a stockholder of Makro since 1995.

ALI intends to continue its traditional activity of developing large-scale, mixed-use integrated communities while diversifying its revenue base by increasing its rental activities and expanding its real estate business into different markets and geographic areas in the country where the company believes there are significant growth opportunities or which complement its existing real estate business.

Okram has a 38-percent interest in Pilipinas Makro while SMIC owns 30 percent.

Previous reports said the Makro Group of Netherlands was planning to buy out its local partners following the passage of the Retail Trade Act of 1999 which allowed foreign investors to own as much as 100 percent of a local retail unit. The group had planned to put up a separate wholly owned-retail trading arm in the Philippines in its bid to expand operations.

Okram is the first foreign company to operate a wholly owned retailing unit in the Philippines followed by S&R Price Club of Pricesmart of the United States.

It currently has 10 outlets, five in Metro Manila and one each in Cebu, Davao, Batangas, Pampanga and Cagayan de Oro.

Makro constructs and operates warehouse-type stores engaged in discount wholesaling of food and non-food items under the trademark "Makro" primarily to retailers and licensed traders.

Its stores cater to card-carrying wholesale buyers who must show their business permits or licenses to become members.

The company is optimistic for its targets this year, with an expected growth in sales for the second half, as consumer confidence level continues to improve as the year progresses.

Makro plans to spend as much as P2.5 billion in the next two years to build nine new stores and refurbish its existing outlets scattered all over the country. A store is estimated to cost between P150 million and P200 million.

Apart from Makro, ALI previously expressed its intention to divest its 18.6-percent stake in Metro Rail Transit Corp., the operator of the the 17.8 kilometer railway system along EDSA.

In view of the changing competitive landscape, the Ayala Group is prepared to give up control of certain businesses to be able to deliver increased shareholder value over the medium-term.

Ayala Corp. president and chief executive officer Jaime Augusto Zobel Ayala II earlier said the group will "not keep businesses where it is no longer the natural owner or where its performance criteria are not met."

ALI builds and sells residential condominium and office buildings, develops industrial parks and mass housing units. As of end-March this year, ALI’s landbank comprised a total of 3,652 hectares of fully converted properties in various locations nationwide.