Manila, Philippines

Developments with SMDC: Merger Talks Causes Breakout

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Early this year, SMDC had a breakout from its almost yearlong sideways movement. From a tough ceiling of ~Php6 to 6.25 per share, it skyrocketed to Php9.50 per share in less than a month.

What’s up?

News and speculation that SM is considering merging SMDC, SMPH and its other property development companies (SM Land, Highlands Prime, etc). The resulting entity is expected to be bigger than Ayala Land in terms of market capitalization and likely to benefit from a certain synergy. Property developer, land company, mall builder. Other rumors were also surfaced, which I’d rather not talk about here.

But then again, this is just mere speculation. Yes, SM confirmed that they are indeed considering this, but aside from that, not much further news on any progress. Nonetheless, the stock price seems to be valuing this in already.

Markets players are even looking closely at the major buyers of the stock, sometimes BDO Securities or Macquarie Capital, with hypothesis that when these two buy bulk of the traded shares, it is because they know of certain developments. And the latter is said to be the one that proposed and eventually to arrange the merger.The market was definitely hyped with the news. What if just mere hype? See the sudden increased volume in February as a series of long green candles wrote SMDC’s recent story. Apparently, the market perceives that should the merger push through, SMDC will benefit more from it whereas SMPH (the rumored entity to where the rest will merge) did not move upwards that much due to this news. Forums even offer computations as to how much SMDC will be valued should the merger push through. Plus some more juicy chismis.

But since it is PSE mandate to disclose any of these developments, and not much has been reported, then no updates so far really.

The stock was so hot that it deviated a lot from its moving-average trend line (red thin line in the graph). Until the eventual correction after peaking at Php9.50.

And now, is it poised to resume its climb? Time to cash in gains or ride the tide still? What if the merger does not push through?

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 PH Stock Market PSE: SM

5 Responses

  1. pen_name says:

    Another suggestion is that you contact your stock broker, from where you bought your SMDC shares. You might want to try this first, as they should know what to do. 🙂


  2. pen_name says:

    Hi Ferds,

    SMDC issued a tender offer around 2 months back to execute the merger / consolidation. Once delisted, you can no longer trade SMDC shares. And most likely, no one is willing to buy anyway.

    As for worthless, not so sure. The same question has been raised in forums. Maybe, SM is still willing to accept SMDC shares for surrender and conversion to SMPH, on a case to case basis?

    One member suggested a possible contact to answer your query. You might want to give this a shot.

    Stock Transfer Services, Inc.
    8th floor, Phinma Plaza
    39 Plaza Drive, Rockwell Center
    Makati City 1200 Philippines
    Tel. (632) 898.7555
    (632) 898.7597

  3. ferds says:

    what happens to SMDC delisted stocks? worthless or tradable?

  4. Carlos says:

    I have SMPH, and I was hoping it would respond better to the rumor, given that it would be the surviving entity… I guess I don't really understand how that works:D

    But if SMDC won't be the surviving entity, what's the end-game? I mean, could the stocks be bought back at a certain price? would the stocks be converted to SMPH?

  5. pen_name says:

    Thank you for your comment Carlos. I actually have both (though prior to the major movement of SMDC in Feb13). It's everybody's guess right now but with the way the stocks behaved, it seems that SMDC will really get a big boost in joining SMPH, whereas SMPH maybe not much, or maybe it is overpriced as it is? But COL target is 26 if I'm not mistaken.

    I think the market expects that SMPH will be buying the public shares of SMDC and eventually delist it? Haha wild speculation. Sorry.

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