PCC: SMC’s offer on Holcim acquisition ‘worth considering’

Published January 31, 2020, 12:00 AM

by manilabulletin_admin

By Bernie Cahiles-Magkilat

The voluntary commitments (VCs) offer by San Miguel Corp. (SMC) to address competition concerns over its acquisition of Holcim Philippines, Inc. is “serious and worth considering,” according to a top official of the Philippine Competition Commission (PCC).

PCC Commissioner Johannes Bernabe told reporters covering the 2020 Manila Forum on Competition said that PCC has entered into a second phase review as SMC offered a set of VCs to address the competition concerns the PCC Mergers and Acquisition office has identified.

“The important thing to note is that they have a set of VCs, which are serious and worth considering because they are substantive and quite detailed,” said Bernabe, who refused to say if the VCs contain offers for divestment of SMC assets.

“There is a range of options that both parties are talking about,” added Bernabe noting that that different behavioral and structural remedies are on the table now.

Structural remedies mean SMC will be required to divest certain assets that they are acquiring as part of the transaction. The behavioral commitment simply means, PCC will allow SMC to purchase the whole assets base, but it will be subject to discipline on the way it behaves in the market.

Bernabe further said that it could be possible that PCC may issue a decision on the VCs before issuing a Statement of Concern over the transaction stating this was done in certain transactions before. But he also noted that each transaction is unique in itself.

The competition concerns in the cement market space stemmed from the fact that
Holcim Philippines has a sizeable presence in the local market with an annual cement production capacity of around 10 million metric tons and a market share of close to 30 percent.

Holcim, which is owned by Europe’s biggest cement company Swiss-based Lafarge Holcim, operates four integrated cement plants and one grinding plant in the country. It has manufacturing facilities in La Union, Bulacan, Batangas, Misamis Oriental and Davao, as well as aggregates and dry mix business and technical support facilities for building solutions.

SMC’s acquisition would substantially boost SMC’s current 600,000 MT ton annual production capacity through subsidiary Northern Cement.

SMC itself said the $2.15-billion acquisition of Holcim would increase its foothold in the cement business, and will provide the opportunity to implement its plan to expand its cement business nationwide.

Aside from SMC’s cement influence once Holcim’s acquisition is completed, it is also interesting to note that SMC President Ramon S. Ang also has personal investments in the cement sector under Eagle Cement.