SMC acquires Holcim

MANILA, Philippines — San Miguel Corp., the country’s biggest conglomerate, has acquired Holcim Philippines from Europe’s biggest cement maker Lafarge Holcim in a $2.15 billion deal.

The STAR reported yesterday that SMC had bagged the deal, making it the biggest cement player in the country.

In a disclosure Friday morning, Switzerland-based Lafarge Holcim said it signed an agreement with SMC for the divestment of its entire 85.7 percent shareholding in Holcim Philippines for an enterprise value of $2.15 billion. 

SMC would acquire 5.5 billion Holcim shares at an estimated price of P16.80 per share.

The deal is between SMC’s wholly-owned subsidiary First Stronghold Cement Industries Inc. and sellers Holderfin B.V., a Dutch company, Union Cement Holdings Corp. and Cemco Holdings Inc.

SMC beat foreign giants that vied for Lafarge such as Japanese giant Taiheyo Cement Corp., Thailand’s Siam City Cement and Anhui Cement Corp. of China.

Closing of the transaction is expected in the fourth quarter subject to customary and regulatory approvals.

Lafarge Holcim CEO Jan Jenish said the sale of the company’s stake in Holcim Philippines now completes the cement giant’s exit from Southeast Asia.

“With the divestment of our activities in the Philippines, we are completing our exit from the increasingly hyper competitive arena in South East Asia. While this decision is based on our strategic portfolio review, we have reached very attractive valuations allowing us to achieve a new level of financial strength,” Jenish said.

Prior to the Philippines asset sale, the company also sold its stake in Indonesia, Malaysia and Singapore to strengthen its balance sheet.

“We have delivered on the promised strengthening of our balance sheet and we are on track to accelerate the execution of our Strategy 2022,” Jenish said.

SMC, for its part, said the acquisition of Holcim Philippines would increase its foothold in the cement business and provide it the opportunity to expand nationwide.

As a result of the transaction, SMC is required to conduct a tender offer for the shares of Holcim Philippines held by its minority shareholders who hold 14.27 percent of the total issued and outstanding capital stock of the company. 

SMC said it intends to file a request for exemptive relief with the Securities and Exchange Commission  to allow the tender offer to be conducted after the final purchase price has been determined and paid.

The transaction requires the approval of the Philippine Competition Commission (PCC), the government’s anti-trust body.

SMC said its board approved the transaction on May 9 with UBS AG as the sole financial advisor.

Holcim Philippines is engaged in the manufacture, sale and distribution of cement, dry mix mortar products, clinker and aggregates. It has cement 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 has a 35 percent stake in another local cement player Northern Cement, which is owned by SMC chairman Eduardo “Danding” Cojuangco.