SM Investments completes fold-in of SM Supermarkets, hypermarts

SM Investments Corp. (SMIC), the listed investment holding company of the SM Group of Companies, has completed the acquisition of 100 percent of Supervalue Inc. and 81 percent of Super Shopping Markets Inc. through a share swap.

Supervalue is the corporate vehicle for the group’s SM Supermarkets while Super Shopping Markets handles all Super SM Hypermarkets.

In a disclosure to the Philippine Stock Exchange (PSE), SMIC said it executed last June 9 the transfer documents for the Supervalue Inc. and Super Shopping Market Inc. shares of stock for and in consideration of 56 million SMIC common shares to be issued upon approval by the Securities and Exchange Commission of the valuation of the exchange of shares and the approval by the PSE of additional listing.

The acquisition is expected to contribute around P28 billion in revenues and P800 million in income to SMIC’s bottom line every year.

SMIC, which has interests in tourism, department store operations, financial services and real estate development, already owns 19 percent of Supervalue.

With the transfer, SMIC will acquire 25 SM Supermarkets and five Super SM Hypermarkets.

Company officials said the acquisition of the SM supermarket and hypermarket business will enhance shareholder value and boost profitability of SMIC.

In 2004, SM Supermarkets posted earnings of P652.7 million on revenues of P23.7 billion while the hypermarket business earned P161.2 million on sales of P4.3 billion.

SMIC reported a net income of P7.1 billion last year or an increase of 22 percent from P5.8 billion in 2004, mainly driven by robust retail sales.

The SM Group intends to open four hypermarts and two to three new supermarkets this year. Identified as potential sites for the hypermarts are Pangasinan, Muntinlupa, Taytay and Tarlac.

It ventured into the hypermarket business to achieve economies of scale in its operations.

The group’s plan is to open two supermarkets and hypermarkets each in succeeding years.

Analysts said the SM Group’s hypermarts should help answer the question of whether hypermarkets can capture a significant share of the Philippine market and make an impact as a new retailing concept or turn out to be just a phase that merchants can forget.

Community mini-malls or hypermarkets have mushroomed in the past three years as they cater to a fixed group of market. A hypermarket is a combination of a supermarket and a department store that operates in suburban areas.