Holcim Philippines to be put on auction block?

MANILA, Philippines – A new round of consolidation looms in the local cement industry as the biggest player in town, Holcim Philippines, may be put on the auction block as part of the rationalization program of its multinational parent conglomerate.

Among the parties that could be interested to buy the local assets of Switzerland-based LafargeHolcim is local cement manufacturer Eagle Cement Corp. while parties that are keen on debuting into the cement business, the Consunji and Phinma group, may also emerge as potential suitors, stock market pundits said.

In the last few weeks, there have been rumors that Eagle Cement, which is led by the family of San Miguel Corp. president Ramon S. Ang, is interested to take over Holcim’s local assets. There is no comment from Ang’s group, as of press time.

On Monday, various overseas reports said LafargeHolcim was considering to sell its business in the Philippines in order to reduce debt.

Eike Christian Meuter, head of media relations at LafargeHolcim, said in an email the company was aware of the reports.

“LafargeHolcim is not commenting on these reports,” Meuter said.

Shares of Holcim Philippines surged by 15.14 percent to close at P7.30 per share on Monday on news of the potential sale. The company is currently valued by the stock market at P40.91 billion.

“Nothing is certain, of course, and investors will have to wait a few months at least for a deal to materialize (if any). However, LafargeHolcim appears to be a motivated seller because it wants to lower debt levels. We therefore assess the odds that a sale will push through is quite good,” local stock brokerage Abacus Securities said in a research note on Monday.

Abacus Securities noted Holcim Indonesia was likewise sold in November last year but the intent to sell was first rumored in July.

Since last week or even before reports about the prospective sale of Holcim Philippines came out overseas, there have been stock rumors that Eagle Cement was interested to buy its local assets.

Eagle Cement’s president and chief executive officer Paul Ang was quoted last year about the company’s interest to buy other players. This company is so far the fourth biggest cement producer in the Philippines and the only one among listed peers that is gaining market share amid a tough operating environment.

Given the anti-trust restrictions implemented by the Philippine Competition Commission, stock pundits also see the possibility the assets may be sold to parties that have no cement manufacturing capability at this time.

Stock pundits said other players that may be interested to bid for Holcim Philippines would be the Consunji group, which has long been planning to debut into the cement space, or the Phinma group, which has returned to the cement business after a 14-year hiatus but has yet to set up its local production hub.

Eduardo Sahagun, president and chief executive officer of Phinma’s cement production arm Philcement Corp., was the former country chief of Holcim Philippines.

No official word was available from Phinma, as of press time.

Despite tight margins, the cement industry is seen to benefit from the government’s aggressive infrastructure-building program. The government’s decision to impose a provisional P8.40 safeguard duty per bag of imported cement is also seen to protect local producers from cheap cement imports. /kga