By James A. Loyola
San Miguel Corporation (SMC) will conduct a tender offer for 14.27 percent of Holcim Philippines, Inc. worth about $357 million after acquiring the majority 85.73 percent for $2.15 billion.
In a disclosure to the Philippine Stock Exchange, SMC said its wholly-owned subsidiary First Stronghold Cement Industries, Inc. has entered into definitive agreements with firms controlled by LafargeHolcim Ltd. for the purchase of 85.7 percent of Holcim for an enterprise value of US$215 billion.
This is on a 100 percent basis, inclusive of fees for transitional service agreements. The deal is subject to regulatory approvals including that of the Philippine Competition Commission.
Holcim Philippines said the agreement was executed by Holderfin B.V., First Stronghold, SMC and Lafargeholcim Ltd.
Under the agreement, Holderfin will sell its shares in Holcim Philippines and shall buy Cemco Holdings, Inc. and Union Cement Holdings Corporation to also sell their shares to First Stronghold, which is a wholly owned subsidiary of San Miguel Equity Investments, Inc. which, in turn, is a wholly owned subsidiary of SMC.
Union Cement owns 3.91 billion Holcim shares equivalent to a 60.55 percent stake, Holderfin has 1.17 billion or 18.11 percent, and Cemco Holdings has 456.69 million or 7.08 percent.
“The sellers believe that the transaction is for the best interest of the company,” said Holcim.
“It’s a logical move for San Miguel considering its exposure to road and airport projects. The company is capitalizing on government’s ‘Build, Build, Build’ infrastructure program,” said Astro del Castillo, managing director at First Grade Finance, Inc.
Switzerland-based LafargeHolcim said it will use the proceeds from the sale to further improve its debt ratio by about 0.3 times. The agreement with San Miguel is expected to close in the fourth quarter.
Last November, LafargeHolcim signed an agreement with Semen Indonesia for the disposal of its entire shareholding of 80.6 percent in Holcim Indonesia for an enterprise value of US$1.75 billion as it sought to divest from the region to reduce debt.