SMC drops bid for Holcim

MANILA, Philippines — Diversified conglomerate San Miguel Corp. (SMC) has dropped its bid to acquire Holcim Philippines Inc. after failing to get the approval of the Philippine Competition Commission (PCC), the country’s anti-trust body. 

Last year, SMC through First Stronghold Cement Industries Inc. (FSCII), made an offer to acquire 85.73 percent of the total outstanding and issued capital stock of Holcim Philippines from companies controlled by LafargeHolcim Ltd.

However, in a disclosure yesterday, SMC said it failed to obtain the approval of the PCC.

“The completion of the acquisition required the approval of the Philippine Competition Commission which was not able to be achieved,” SMC said.

Thus, it said the proposed acquisition by FSCII of the 85.73 percent of HPI shall no longer proceed. Accordingly, FSCII withdraws the launch of the tender offer of the HPI shares held by its minority shareholders which was made by the company on September 23, 2019.

The PCC conducted two rounds of review and even extended for another 30 days the 60-day phase 2 review process. 

The Mergers and Acquisitions Office (MAO) of the PCC has flagged competition concerns in San Miguel’s proposed takeover of Holcim Philippines Inc., citing monopoly, increased market power and potential collusion arising from the merger. 

In its review, MAO said the buyout by SMC subsidiary First Stronghold Cement Industries Inc. of Holcim Philippines would result in a substantial lessening of competition in the market for grey cement.

The MAO particularly cited four key areas where competition would decrease. These are in northwest Luzon, northeast Luzon, central Luzon and greater Metro Manila. 

In greater Metro Manila, central Luzon, and northeast Luzon, the transaction results in high combined market shares, allowing Top Frontier to control a majority of the supply in these areas.

First Stronghold won the bid to acquire Holcim Philippines last year amid the global cement giant’s divestments in Southeast Asia.

At present, Holcim Philippines, subsidiary of global cement giant LafargeHolcim Ltd, manufactures, sells and distributes cement and related aggregates with eight cement facilities in the country.