SMC seeks exemptive relief on Holcim bid

MANILA, Philippines — San Miguel Corp., the diversified conglomerate that won the bid for Holcim Philippines, has asked the Securities and Exchange Commission  (SEC) for exemptive relief.

This is related to the conduct of the mandatory tender offer by SMC’s First Stronghold Cement Industries Inc. on the shares held by the public in Holcim Philippines. 

First Stronghold is a wholly owned subsidiary of San Miguel Equity Investments Inc., which in turn is a wholly owned subsidiary of SMC. First Stronghold made a bid for Holcim Philippines  and won in a $2.15 billion deal that is expected to be completed this year. 

“The company requested the SEC to allow First Stronghold to launch, conduct and settle the mandatory tender offer only after i) the approval by the Philippine Competition Commission of the purchase by First Stronghold of 5,531,566,062 common shares representing 85.73 percent equity in Holcim Philippines from various share sellers and ii) the completion of post-closing purchase price adjustment in accordance with the agreement by the parties which may result in an upward or downward adjustment in the purchase price,”  SMC said in a regulatory filing. 

SMC acquired Holcim Philippines from Lafarge Holcim Ltd., Europe’s biggest cement maker. 

The Switzerland-based cement company received a lot of offers, but SMC gave the best option to further grow the business, Lafarge said. Industry sources said 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.

According to market estimates, SMC bought Holcim Philippines for an attractive price of at least P16.85 per share, significantly higher than P13.54 per share closing price on May 8 before the deal was announced. 

An analyst in a foreign company said SMC knows the cement industry well enough to make an attractive offer. It is also not the first time that SMC acquired a multinational company and grew it to become a top player in the country, he said, referring to SMC’s acquisition of Petron Corp. in 2008 from the Ashmore Group. 

The next hurdle for SMC is the PCC, the government’s anti-trust body, but industry sources said the deal is unlikely to create a monopoly given the huge number of cement players in the country. 

In the Philippines, there are eight integrated cement manufacturers namely Holcim, Republic Cement, Cemex, Taiheiyo, Northern Cement, Eagle Cement, Goodfound and Mabuhay. These manufacturers operate a total of 16 integrated cement plants and three cement grinding plants all over the country. Big Boss Cement, a new entrant opened a cement grinding plant in Pampanga in 2018.