DoubleDragon Corporation, the partnership between tycoons Tony Tan Caktiong and Edgar Sia II, is finally transitioning into a holding company with its acquisition of Sia’s listed retailer MerryMart Consumer Corporation after initially buying a 35 percent stake for ₱1.28 billion.

In a disclosure to the Philippine Stock Exchange, DoubleDrago said its board of directors had approved the acquisition of 2.66 billion common shares of MerryMart for ₱1.28 billion, based on the 30-day volume-weighted average price (VWAP) of MerryMart shares at Php 0.48 per share.

Half of the purchase price will be paid using DoubleDragon shares (also valued using the past 30-day VWAP of ₱9.30 per share) and 50 percent in cash, amounting to ₱637.97 million.

This transaction translates a total equity valuation for MerryMart of approximately ₱3.65 billion, based on the 30-day VWAP pricing.

As a result of the transaction, the purchaser DoubleDragon Corporation is required to conduct a mandatory tender offer of the shares of MerryMart held by its remaining shareholders of the total issued and outstanding capital stock at the same valuation, subject to final regulatory approvals.

The firm said its acquisition of MerryMart Consumer Corp that generates over ₱7 billion of recurring revenues annually mainly from essential retail (such as grocery and pharmacy) and other consumer related businesses would complement the ecosystem of DoubleDragon as an investment holding company.

Given MerryMart Group's various formats in retail and wholesale as well as its pharmacy subsidiaries who are major pharmacy players in Quezon-Luzon and Zamboanga-Mindanao, and its dominant grocery business in Capiz province, the acquisition of the MerryMart Group is expected to create longterm value and synergy to DoubleDragon Group.

The acquisition is also in line with the transition of DoubleDragon into an investment holding company. This is in accordance with the vision of DD Chairman Sia and Co-Chairman Tan Caktiong four years ago when it officially changed its corporate name from DoubleDragon Properties Corp. to DoubleDragon Corporation and amended its articles from a real estate company into an investment holding company.

“It's a way for DoubleDragon to diversify its investment portfolio. Right now, their holdings are highly concentrated in real estate. Taking a substantial stake in MerryMart will give them exposure to the consumer retail business,” said Chinabank Capital Corporation Managing Director Juan Paolo Colet.

He added that, “On the other hand, MerryMart will benefit from the financial, management, and strategic support of DoubleDragon.

“This might be a prelude to DoubleDragon eventually taking a majority stake in MerryMart. At this point, we do not think there will be many public shareholders who will participate in the tender offer since the market price is above the mandatory tender offer (MTO) price. Moreover, the MTO price is near the stock's all-time low.”

DoubleDragon said MerryMart will add value to the existing investment portfolio of the DoubleDragon Group with its chain of provincial community malls, its string of office buildings, warehouse complexes, and hotels mainly through Hotel101.

"DoubleDragon is now in an excellent position where it can capitalize on its strong balance sheet to add worthwhile investments outside of the property sector that would have massive growth potential. I am personally excited for what the future holds for the new DoubleDragon,” said Tan Caktiong.