More mergers, acquisitions seen in second half

MANILA, Philippines - The country is likely to see more mergers and acquisitions among companies in the second half, driven by the rapid growth in the economy, the Philippine Competition Commission (PCC) said.

“The economy is growing rapidly and there are so many investors coming in. With all these integration, such as the ASEAN integration and globalization, there are pressures among companies to merge,” PCC chairman Arsenio Balisacan said.

PCC, he said, continues to approve applications for M&A even as its first major transaction, the sale of San Miguel Corp.’s telecommunication assets to PLDT and Globe, has become controversial.

 “We continue the approval of applications for M&A. PCC just started last February. There are a lot,” Balisacan said but declined to provide additional details on the number of applicants as well as the sectors they belong to.

The two telcos insist the deal has been deemed approved but the PCC said this is not the case.

Balisacan said the PCC would continue to review all applications for M&A and other similar transactions to ensure fair competition.

“As I said, integration or size is not the issue. Companies should not use their size to abuse their consumers or kill their competitors,” he said.

First Metro Investment Corp. (FMIC), the investment banking arm of George Ty-led Metrobank, also said in a recent briefing there is a strong M&A interest in the Philippines.

 “A lot of things are happening such as the ASEAN Economic Integration. People are anticipating. They want to position themselves for the growth. The balance sheets of the locals are in good shape. They have access to good debt financing. The valuation of companies outside the Philippines is declining so it makes sense to consider alliances. Valuations are high. Meanwhile, for most local conglomerates, the Philippine market is becoming small,” said Justino Juan Ocampo, executive vice president and head of FMIC’s investment banking group.

Ocampo sees strong consolidation in the infrastructure and logistics sector.

“We should expect a bit more of M&A in the second half, same as in the first half of the year. The deals are becoming larger and larger. There’s room for alliances and consolidation,” Ocampo said.

In the first half, there were 10 corporate deals with total transaction value of at least P775.87 billion.

Among the deals were GT Capital Holdings Inc.’s P8.76 billion acquisition of a majority stake in Profriends, the Pangilinan-led Beacon Electric’s acquisition of stake in Global Business Power Corp. for a P22.10 billion and Bank of Tokyo-Mitsubishi’s P36.92 billion acquisition of a stake in Security Bank.