The Philippine Competition Commission (PCC) is not likely to block the planned acquisition by San Miguel Corp. of Eagle Cement Corp., according to stockbroker Abacus Securities Corp.
Abacus in an investors note Wednesday said the acquisition will not result to a change in control in the cement firm, whose majority owners are also members of the San Miguel board.
San Miguel late Tuesday said it was in talks with Eagle Cement’s controlling shareholders – Ramon Ang, John Paul Ang, Monica Ang, and Far East Holdings Inc. (FEHI) – to acquire their stakes, equivalent to 88.5 percent of Eagle Cement.
FEHI is majority-owned by Ramon Ang who also sits as president and is a shareholder of San Miguel. John Paul Ang also sits in the San Miguel board.
San Miguel plans to buy the Eagle Cement stake at P22.2 per share.
This prices the cement firm at about P110 billion, with P97 billion going to the controlling shareholders, according to stockbroker AB Capital Securities Corp.
The transaction will trigger a mandatory tender offer to Eagle Cement minority shareholders.
The transaction will go through regulatory approval, particularly on anti-trust regulations of the PCC.
The PCC said it will wait for the formal notification by San Miguel and Eagle Cement.
Earlier, the PCC thumbed down the planned acquisition by San Miguel of the assets of Holcim Philippines Corp.
Abacus said at the planned acquisition price, it values Eagle Cement at 17x its 2023 earnings at 265 percent book value as of end-June.
It is gives a premium of nearly 50 percent compared to the consensus target price of P15 by the market for cement firm.
Abacus noted the stock never traded higher than P16.70.
Online stock broker Colfinancial.com said the acquisition may result to Eagle Cement’s delisting since its free float will fall below the required minimum.
“Note that currently the minimum public float is 10 percent and Eagle Cement’s free float is just at 11.5 percent,” it said.
