Conglomerate San Miguel Corp. said Monday it dropped the plan to acquire the controlling stake in cement manufacturer Holcim Philippines Inc. after the agreement lapsed without obtaining government approval.
San Miguel said in a disclosure to the stock exchange subsidiary First Stronghold Cement Industries Inc. would no longer proceed with the planned acquisition of 5.531 billion common shares, equivalent to 85.73-percent stake in Holcim Philippines, for more than $2 billion after the agreement signed in May 2019 had lapsed.
San Miguel said the completion of the deal required the approval of the government anti-trust body Philippine Competition Commission which both parties were not able to obtain.
“In view of the above, the proposed acquisition by FSCII of the 85.73 percent of HPI shall no longer proceed,” San Miguel said.
“Accordingly, FSCII withdraws the launch of the tender offer of the HPI shares held by its minority shareholders which was made by the Company on September 23, 2019,” it said.
PCC in January expressed concern that the San Miguel-Holcim Philippines deal could result in monopoly and potential collusion arising from the merger.
Based on the review conducted by PCC’s Mergers and Acquisitions Office, the buyout would result in higher cement prices and the lessening of competition in four areas in Luzon.
Holcim Philippines manufactures, sells and distributes cement and related aggregates with eight cement facilities in the Philippines and is a subsidiary of global cement giant LafargeHolcim Ltd.
San Miguel through parent firm Top Frontier Investment Holdings Inc. owns two cement plants that are slated to begin commercial operations within the next two years.
The family of businessman Ramon Ang, who is the president and chief operating office of San Miguel, also owns Eagle Cement Corp. which operates a cement plant in Bulacan and is in the process of completing a new plant in Cebu.
San Miguel agreed to acquire the majority stake in Holcim Philippines last year to expand the group’s cement business as the Philippine government undertakes a massive infrastructure program.
The share price of San Miguel rose by P0.50 to close at P97 while the stock of Holcim Philippines fell P2.55 to settle at P8.75.