Eagle Cement Corporation, a firm controlled by San Miguel Corporation President and CEO Ramon S. Ang, is planning to voluntarily delist from the Philippine Stock Exchange (PSE) if San Miguel Equity Investments is able to acquire an additional 1.5 percent of the company.

In a disclosure to the PSE, Eagle Cement said its Board of Directors resolved to cooperate with SMC subsidiary SMEI and fully support its tender offer for 11.5 percent of the cement firm worth P12.66 billion.

SMC will undertake a mandatory tender offer for the minority-owned shares of Eagle Cement once the Philippine Competition Commission approves its P97.5 billion acquisition of 88.5 percent of the cement firm.

Eagle Cement said a share purchase agreement has already been signed between SMEI and Eagle Cement’s majority shareholders led by Ang. This consists of 4.43 billion shares from Ang’s Far East Holdings Inc. as well share held personally by Ang, his son and SMC Director John Paul L. Ang, and daughter and SMC authorized signatory Monica L. Ang at P22.02 per share.

Once the tender offer is completed and SMEI is able to acquire more than 90 percent of the total outstanding capital stock of Eagle Cement, the firm said it will seek the approval of its shareholders to apply for the voluntary delisting of its shares.

SMEI’s acquisition of more than 90 percent of Eagle Cement will mean that the cement firm is no longer compliant with the PSE’s minimum public ownership rule although Eagle has the option to sell more shares to the public to dilute SMC’s stake.

The closing of the transaction is subject to the approval by the PCC and this will trigger the mandatory tender offer of the shares of Eagle Cement held by its minority shareholders.

SMC said intends to file a request for exemptive relief with the Securities and Exchange Commission to allow the tender offer to start after the approval by the PCC.

Abacus Securities Corporation said the deal values Eagle Cement at 50 percent higher than the consensus target price on Bloomberg and well above the initial public offering price of P15.

“The stock never traded higher than P16.70 so a mandatory tender offer means everyone currently holding Eagle stand to make money,” it noted.

SMC said “The acquisition of ECC offers a complementary approach to the current investment strategy of SMC in the cement industry, will increase its foothold in the cement business and provide the opportunity to implement its plan to expand its cement business.”

Abacus said “one potential option for SMC once the acquisition is finalized is to merge Eagle with the conglomerate’s cement arm Southern Concrete Industries Corporation which is located in Davao.”

“This would increase Eagle’s capacity from 8.6MMT to up to 12.6MMT and would grant the company access to the Mindanao market,” it added.