URC vows to upgrade 2 acquired sugar mills

Universal Robina Corp., the biggest snack food maker, has made several commitments to the Philippine Competition Commission to address potential competition issues regarding its planned acquisition of the sugar milling and refining assets of Roxas Holdings Inc. and its unit in Batangas.

URC plans to purchase all buildings, improvements, machineries, and equipment owned by RHI and unit Central Azucarera Don Pedro Inc., as well as the land on which these assets are located.

The voluntary commitment of URC comes after the PCC’s Mergers and Acquisitions Office issued a state of concern detailing the potential competition issues arising from the transaction.

Among the commitments made by URC are increasing sugar recovery rates of the Balayan sugar mill and CADPI for a period of 10 years following the completion of the acquisition, and perform capital upgrades on CADPI to improve its energy efficiency.

URC also committed to assist planters in terms of fertilizer, cash loans and use of mechanical harvester within the vicinity of Balayan and the CADPI mills over at least 10 years following the completion of the acquisition.

URC has committed to increase the planters’ share of the raw sugar milled at the CADPI mill from 68 percent to 70 percent beginning in crop year 2019-2020, and at the Balayan mill, from 67 percent to 68 percent beginning in crop year 2019-2020.

PCC’s MAO in June was notified of the proposed acquisition of URC of the milling and refining assets of CADPI and RHI in Batangas.

The MAO identified competition concerns and informed the parties the need for a more comprehensive and detailed analysis of the transaction. 

PCC’s MAO in October said transaction would likely result in substantial lessening of competition in the market for the provision of sugar cane milling services in the provinces of Batangas, Cavite, Laguna and Quezon, as URC-Balayan and CADPI are the only sugar milling firms operating in the area.

MAO said the elimination of CADPI as URC’s competitor will give URC the ability to reduce the amount or eliminate some of the incentives currently being enjoyed by sugar cane planters as a way of reducing costs.

URC operates six sugar cane mills nationwide, namely URC-Balayan in Batangas, URC-Passi in Iloilo, URC-Tolong and URC-Ursumco in Negros Oriental, URC-Sondenco in Negros Occidental and URC-Carsumco in Cagayan.

RHI, which is described as the largest integrated sugar business in the country,  manages sugar miller Central Azucarera de la Carlota Inc., ethanol producers Roxol Bioenergy Corp. and San Carlos Bioenergy, and RHI Agri-business Development Corp.

Topics: Universal Robina Corp. , Philippine Competition Commission , Roxas Holdings Inc.
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