San Miguel, Holcim notify PCC of merger withdrawal

San Miguel Corporation, through its parent firm Top Frontier Investment Holdings Inc., and Holcim Philippines have formalized their withdrawal from their planned merger with a notification to the Philippine Competition Commission (PCC).

In a statement on Thursday, the PCC said that Top Frontier, representing San Miguel Corporation (SMC) and its subsidiary First Stronghold Cement Industries Inc. (FSCII), said in a letter on May 13 that the “group shall no longer pursue another merger in similar or related markets involving the same parties as the proposed transaction.”

Under the PCC’s rules, merger parties are required to inform the antitrust body of any substantial modification to their notified transaction, including the decision to abandon or withdraw it.

Holcim Philippines, likewise, said it will no longer submit comment on the allegations raised in the Statement of Concerns by the PCC’s Mergers and Acquisitions Office (MAO) given the aborted deal, according to the PCC.

To recall, the PCC’s MAO flagged competition concerns arising from the merger, such as monopoly in northwest Luzon, and increased market power and potential collusion among inter-related cement companies controlled by FSCII in the northeast Luzon, Central Luzon, and Greater Metro Manila areas. 

The antitrust body said it provided the parties due course to address the competition concerns raised by MAO.

It reverted to Phase 2 review of the transaction when the parties’ proposed voluntary commitments were rejected due to legal and enforceability issues.

The withdrawal came to pass during the final stage of the Phase 2 review, at a time when the proceedings were suspended in compliance with the Bayanihan to Heal as One Act and Administrative Order No. 30, subsequent to the community quarantine imposed amid the COVID-19 health crisis.

“PCC recognizes how the pandemic is changing the global economic landscape, sowing change in firms’ appetite for mergers, and causing severe disruption to businesses in the Philippines and abroad. Ultimately, we defer to SMC and HPI on their business decisions,” PCC Chairman Arsenio Balisacan said.

FSCII forged the deal with Holcim Philippines in 2019 amid the global cement giant LafargeHolcim’s divestments in Southeast Asia, including the Philippines.

The San Miguel unit was poised to acquire 86.73% of Holcim Philippines for an estimated $2.15 billion.

As the country’s antitrust authority, PCC is an independent quasi-judicial body established by the Philippine Competition Act to review mergers and acquisitions for possible substantial lessening of competition in the market and investigate anti-competitive conduct by businesses across all sectors.

Through its mandate, PCC aims to ensure that businesses compete and consumers benefit from fair market competition. — BM, GMA News