JTI seeks clearance for Mighty deal
The Philippine unit of Japan Tobacco Inc. has sought clearance from the country’s antitrust body for its purchase of homegrown Mighty Corp.’s assets and distribution network.
If cleared, the transaction will officially be a done deal by next month.
As such, the government would likely receive by August the rest of the settlement offered by Mighty for its tax liabilities.
The cigarette firm offered P25 billion but the amount was expected to reach P30 billion, inclusive of taxes. It earlier paid P3.44 billion.
Philippine Competition Commission Chair Arsenio M. Balisacan told the Inquirer yesterday that Japan Tobacco International Philippines last Monday submitted its notification to the PCC for the planned P45-billion acquisition of Bulacan-based Mighty.
Under the country’s antitrust law or Republic Act No. 10667, all merger and acquisition transactions worth P1 billion and above must be approved by the PCC.
“Notifications are reviewed by our mergers and acquisitions office (MAO) for sufficiency. If the submission is complete or the parties have fully complied with all the notification requirements, the review will proceed to phase one, which will not take more than 30 days. If the MAO does not see any concern, it will recommend that the transaction be cleared,” Balisacan said.
However, if the MAO finds a concern, “it will continue with its review for a maximum period of 60 days,” Balisacan said.
Ultimately, the PCC will decide based on the MAO’s recommendations, he said.
Last Monday, Finance Secretary Carlos G. Dominguez III said “the government’s full collection of Mighty’s civil settlement of its tax liabilities will depend on how swiftly the PCC can approve the sale of the homegrown cigarette company’s assets to JTI.”
In his State of the Nation Address also last Monday, President Duterte ordered the DOF and the BIR to accept Mighty’s settlement offer of P25 billion.
Mighty is the second biggest cigarette manufacturer in the country after PMFTC Inc., the joint venture of tycoon Lucio Tan and global giant Philip Morris International.
“This will be the biggest tax settlement on record. It will produce a windfall for government, which is significant, since we face the unexpected costs of rebuilding Marawi and Ormoc,” President Duterte said in his Sona.
But the President said “the acceptance of the tax settlement offer does not preclude other criminal charges against the company that the BIR may decide to file.”
The government decided to settle with Mighty as it wanted “to avoid a long court battle that, as we saw in previous cases, could take years to resolve,” the President said.
The BIR had filed in the Department of Justice three tax evasion cases against Mighty and its top executives for a total of P37.9 billion in unpaid excise taxes due to alleged use of fake tax stamps.
The tax settlement amount will be funded by the sale of Mighty’s assets and distribution network to JTI Philippines.
Last week, the DOF through the BIR accepted an initial P3.44-billion payment from Mighty and JTI.
