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Stock Commentary

CemexPH to buy 'APO' and 'Rizal' cement brand trademarks

Merkado Barkada
CemexPH to buy 'APO' and 'Rizal' cement brand trademarks

DMCI [DMC 11.20 unch; 45% avgVol] [link] and a group of Consunji Family-owned companies purchased Cemex Philippines [CHP 1.41 unch; 117% avgVol] from its Mexico-based parent company for P17 billion as part of the Consunji Family’s planned expansion into the cement business and the selling company’s goal to divest of its various Asian operations. While that purchase moves toward an end-2024 completion, the two parties have agreed to a deal that will sell the IP and trademarks associated with the “APO Cement”, “Rizal”, and “Island” brands to CHP for approximately P740 million. As InsiderPH notes, this move will allow the Consunji Family to “rely on the company’s well-known brands to maintain and expand their market position” as the family enters into the “unfamiliar cement business”. 


MB bottom-line: If DMC and the buying consortium already purchased CPH, wouldn’t the brand names be part of the deal? Not necessarily! I don’t have specific knowledge of this deal, but it’s not uncommon for the intellectual property (trademarks, logos, and other branding rights) of a corporation to be owned by an entirely separate corporation, with the use of those marks and logos governed by some agreement. They could have set it up this way for any number of reasons (usually it’s to protect the brand assets from the risks and liabilities of the operating company), but having the branding separated out has allowed CPH's previous parent company to extract a little extra value out of DMC in this transaction. Now, as InsiderPH pointed out, the Consunji Family will be able to hit the ground running with the name recognition and marketplace goodwill associated with those brands instead of having to learn the cement business while also hawking products under new and unknown brand names. We can tell that that’s valuable because the Consunji Family just paid P740 million for it!

 

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