RETAIL giant SM Prime Holdings Inc. (SMPH) is acquiring the Sy family’s three malls in China for roughly P10.8 billion through a share-swap scheme. In a briefing Wednesday, SM Prime executive vice president Jeffrey Lim said the mall operator would still focus on expanding its malls in the provinces but has decided to also gain a foothold in China’s fast-growing economy and use this as a platform for long-term growth.

The proposed acquisition will be effected through a share-swap whereby SM Prime will issue 913 million new shares to the Sy family, which will give them 2 percent of the mall operator.

In exchange, SM Prime will get 100 percent ownership of the China malls. Shoemart Inc., the private investment firm of the Sy family and SM Investments Corp., the Sy group’s flagship company, own a combined 70 percent of SM Prime.

SM Prime earlier tapped Citigroup Global Markets Ltd. and Macquaries Securities (Asia) Pte. Ltd. as its financial advisers for the acquisition and Savills Valuation and Professional Services Ltd. as independent asset appraiser.

The SM malls in China are similar to SM malls in the country and are located in the southern and western parts of China, particularly in Xiamen, Jinjiang and Chengdu. First to open in December 2001 was its 128,000-square-meter mall in Xiamen, almost similar to the size of SM City Sta. Mesa.

SM Jinjiang opened in November 2005 with a gross floor area of 170,000 sq.m. while SM Chengdu was launched last October 2006, with a similar GFA as Jinjiang.

‘While SM Prime continues to expand its operations in the Philippines, its planned acquisition of the China malls will provide its shareholders the opportunity to tap and take advantage of the high growth prospects offered by China, being Asia’s growth leader,’ SM Prime president Hans Sy said in a statement.

SM Prime hopes to sign an agreements with the Sy family in connection with the deal in the first quarter of 2008 and complete the acquisition after securing regulatory approvals by the first half of next year.