Philippine billionaire Henry Sy will merge property units and assets under SM Prime Holdings Inc. (SMPH) this year that will create the country’s biggest developer.

SM Land Inc., a closely held unit, will offer existing shares of SM Prime for outstanding stocks of listed affiliates SM Development Corp. (SMDC) and Highlands Prime Inc. (HP), according to a joint e-mailed statement issued today by SM Prime and parent SM Investments (SM) Corp. SM Land will be combined with SM Prime, which will acquire other property assets of its parent, it said.

Teresita Sy-Coson, vice chairwoman of SM Investments Corp., has said previously a decision to merge will be known this year. Photographer: Julian Abram Wainwright/Bloomberg

SM Prime, the largest Philippine shopping mall operator, is poised to surpass Ayala Land Inc. (ALI)’s 465.6 billion peso ($11 billion) market capitalization. The move will allow SM Prime to pursue bigger projects, backed by the group’s experience in developing malls, homes, offices and resorts, it said.

“This consolidation is clearly intended to rationalize the group’s property business,” James Lago, head of research at PCCI Securities Brokers Corp., said before the announcement. “On the one hand, you have property sales that are explosive and volatile and rental income, at the other, which is steady and predictable.”

SM Investments, SM Prime, SM Development and Highlands sought a trading halt today. SM Investments is the biggest Philippine company by market capitalization.

Share Swap

SM Land will offer shares of SM Prime for SM Development and Highlands from June 4 to July 9, according to the statement. SM Prime will seek the approval from shareholders of the plan on July 10.

SM Development and Highlands approved the plan to delist, according to separate disclosures. SM Development said every share can be exchanged for 0.472 SM Prime share, while every stock of Highlands can be swapped for 0.135 of SM Prime.

Henry Sy Jr. will be the chairman of SM Prime while younger brother Hans Sy will stay as president. SM Development President Jeffrey Lim will remain as chief finance officer of SM Prime, according to the statement.

“Streamlining our real estate businesses under SM Prime would allow SM Investments to focus on pursuing new growth opportunities,” said SM Investments’ Executive Vice President Jose Sio said in the statement.

Belle Rises

Manila-based SM Investments, the holding company of the 88-year-old billionaire Sy, fell 4.4 percent to 1,119 pesos yesterday, while SM Prime sank 2.5 percent and SM Development lost 4.2 percent. Highlands Prime, a builder of a mountain resort south of Manila, declined 10 percent on May 29.

Belle Corp. (BEL), which is building a Manila casino resort complex with Melco Crown Entertainment Ltd. (MPEL) and wasn’t mentioned in the consolidation plan, rose 0.8 percent at 1:36 p.m. in Manila trading.

Other property assets of Sy include hotel resorts, offices, convention centers, a 16,000-seat sports arena and a 6,000-hectare beach and mountain resort in Batangas, a province south of the capital.

Sy, who migrated from China in 1936, has an estimated net worth of $16.3 billion as of yesterday, according to the Bloomberg Billionaires Index. He ranks 45 in the list.