SMC cancels deal to buy into Holcim Philippines

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Metro Manila (CNN Philippines, May 11) – San Miguel Corporation called off its plan to acquire a majority stake in cement maker Holcim Philippines after failing to secure regulatory clearance.

The listed conglomerate said in a Monday disclosure that the one-year window to complete the merger prescribed by the Philippine Competition Commission has lapsed.

On May 10, 2019, SMC announced the deal to acquire 85.73 percent of Holcim for $2.15 billion (about ₱108 billion) through its subsidiary First Stronghold Cement Industries Inc., which would give control over the company. Existing rules require big-ticket merger deals like this to be approved by the regulator within a year from its execution, which ended this week.

Holcim Philippines, a unit of global giant LafargeHolcim Ltd., manufactures and distributes grey cement and its aggregates in eight facilities.

The antitrust body flagged the SMC-Holcim merger deal in January, saying the buyout could lead to "monopoly, increased market power, and potential collusion" in cement production. San Miguel said the deal will "no longer proceed" and the tender offer made to minority shareholders last September has also been withdrawn.

Apart from First Stronghold, PCC also said Ang's position as chairman of Eagle Cement Corporation makes it a sister company, which would effectively eliminate competition in areas like Northwest Luzon. This arrangement would also make it very hard for new players to challenge the Ang-owned cement producers in Greater Metro Manila, Central Luzon, and Northeast Luzon, the regulator added.

Eagle Cement has denied operating under SMC's wing, saying it is not involved in the merger deal.

With the collapsed deal, Holcim Philippines will remain under the control of Union Cement Holdings Corporation with a 60.55 percent stake, as well as global firm Holderfin B.V. (18.11 percent), and Cemco Holdings, Inc. (7.08 percent), the company told the local bourse.