Following the collapse of a $2.15-billion takeover bid by San Miguel Corp. (SMC), the country’s leading cement maker Holcim Philippines Inc. (HPI) is not going back to the auction block anytime soon.
Instead, HPI is making long-term plans to beef up its capacity in the Philippines, which has seen one of the longest and harshest lockdowns in the world during this coronavirus pandemic, while remaining part of the Lafarge Holcim global group.
As the agreement between the San Miguel group and LaFargeHolcim lapsed without the approval of the Philippine Competition Commission (PCC) in May, HPI will “remain with the major shareholder of LafargeHolcim” and “grow with the company and with the country,” HPI chief executive John Stull said in an annual meeting on Wednesday.
Responding to a shareholder’s query on whether LafargeHolcim was still keen on divesting its stake in HPI, Stull said: “We are very pleased to know that we are no longer in the sales process and we’re very excited about the future working with one of the largest and most successful companies in the building material sector and we’re happy to remain part of the group.”
The collapse of the deal with SMC was earlier expected to reopen HPI to a new round of bidding. During the previous auction, SMC was pitted in the final round against Anhui Conch, the largest cement manufacturer in mainland China.
But with the COVID-19 pandemic depressing stock prices and causing a global recession, the environment has likewise turned unfavorable to unload corporate assets unless the seller was willing to accept fire-sale valuations.
In the case of HPI, it is trading closer to its 52-week low of P5.02 a share while its peak valuation was P15.12 each. The company is valued by the stock market at P35.4 billion, or less than half the price that SMC was previously willing to pay for control of the company.
Shares of HPI fell by 4.2 percent to close on Wednesday at P5.25 each.
SMC’s acquisition of a controlling stake in HPI was aborted due to its failure to obtain clearance from the PCC, which had flagged certain antitrust concerns. The PCC was particularly worried about a substantial reduction in market competition for cement in four key areas in the Philippines.
Now that it is expected to remain under the wings of LafargeHolcim, HPI is mapping out long-term plans to boost the capacity of its manufacturing plants in Luzon and Mindanao.
“We believe that Philippines is a great opportunity for investment,” he said.
“Being a member of one of the world’s leading building materials providers is a source of strength during these times. The group has been supporting partners all over the world to recover better, with sustainability at the core of its efforts. Together with our partners, we, too, are determined to help move the country forward,” he said.
While the current business environment has its challenges, Stull said the group’s “health and safety culture makes us confident in our ability to continue running our facilities safely as we embrace the new normal.”
He reported that HPI had taken quick and aggressive measures for personal hygiene, social distancing and health checks to keep people safe against COVID-19 in its facilities.
Stull added that digital innovations were enabling the company to continue providing “seamless service and engaging customers.”