San Miguel backs out from Holcim Philippines takeover
San Miguel Corp. said Monday it junked its planned buyout of Holcim Philippines Inc., the country’s largest cement maker, after failing to secure the approval of antitrust regulators.
In a disclosure to the stock exchange, the Philippines’ biggest conglomerate said the agreement to acquire 85.73% stake in Holcim Philippines already “lapsed” without winning a green-light from Philippine Competition Commission (PCC). In January, the PCC warned the merger could substantially lessen competition in the grey cement market, where tycoon Ramon Ang's Eagle Cement is also a key player.
Shares of Holcim at the local bourse dropped 22.6% to close at P8.75 apiece on Monday, following the announcement. San Miguel shares inched up 0.52% to P97 each.
In its announcement, San Miguel said First Stronghold Cement Industries Inc. — a wholly-owned subsidiary of San Miguel Equity Investments Inc. — has withdrawn the launch of a tender offer to purchase Holcim Philippines stocks held by minority shareholders.
The development marked a setback for Ang’s ambition to expand his cement business.
Before the coronavirus pandemic hit, Ang was seeking to cash into the cement industry benefiting from a construction boom fueled by President Rodrigo Duterte’s massive infrastructure program.
For its part, LafargeHolcim, Holcim Philippines' parent firm, had planned to use the proceeds from the supposed merger to “further improve” its debt ratio by approximately 0.3 times.
In objecting to the buyout, competition watchdogs said the deal could result into a cement monopoly in four key areas in Luzon. If the deal was completed, no new players are likely to or can timely counteract the parties’ market power, regulators said.
The buyout also “increases the likelihood of firms to engage in coordinated behavior,” they added.