Diversified conglomerate San Miguel Corporation is planning to acquire 88.5 percent of Eagle Cement Corporation, a firm controlled by SMC President Ramon S. Ang, P97.5 billion.
In a disclosure to the Philippine Stock Exchange, SMC said its Board of the Directors, with the endorsement of the Related Party Transactions Committee, authorized the acquisition of the publicly listed cement producer.
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The approved acquisition price is P22.02 per share, a premium over the last traded price of P15.40 per share. Prior to the announcement, Eagle Cement shares gained P0.50 per share to P15.40, a one year high, from P14.90 last Monday.
“The Board of Directors authorized the Management of the Corporation to negotiate and enter into a share purchase agreement with the selling shareholders,” SMC said.
It named Eagle’s selling shareholders as Ang and his son John Paul L. Ang, daughter Monica L. Ang, and his majority-owned Far East Holdings, Inc. (FEHI).
Ang is the SMC President and Chief Executive Officer while he is also the Chairman, President and Chief Executive Officer of FEHI, and also the Chairman of Eagle Cement.
John Paul L. Ang is a member of the Board of Directors of SMC and is also the President and Chief Executive Officer of Eagle Cement.
SMC said Ramon S. Ang and John Paul L. Ang did not participate in the approval by the Board of Directors of the Corporation of the proposed acquisition.
“The proposed transaction will trigger notification and clearance with the Philippine Competition Commission, and a tender offer of the shares held by the minority shareholders of ECC,” said SMC.
Eagle Cement recorded a net income of P2.96 billion during the first half of the year, 20 percent lower versus the same period last year as the increase in revenue was offset by higher production cost.
It said costs rose due to surge in prices triggered by the Russia-Ukraine situation and the recent frequent and wider ranging lockdowns in various manufacturing hubs causing bottlenecks in global supply chains.
Eagle Cement posted a 24 percent growth in net sales to P13.68 billion from P11.06 billion in the corresponding period last year, due to higher sales volume and average selling price of cement, with additional revenue contribution from its subsidiary, SNMC.
Cost of goods sold jumped 49 percent to P8.86 billion in the first half of 2022 from P5.93 billion in the same period last year because of the spike in prices of coal and power coupled with the higher raw materials consumption relative to the increase in sales volume.