San Miguel Corp. is offering 97 billion pesos ($1.6 billion) to takeover affiliate Eagle Cement Corp. as billionaire Ramon Ang—the controlling shareholder of both companies—seeks to consolidate his business interests amid a construction boom in the Philippines.
Under the proposed deal, which was approved by San Miguel’s board on Tuesday, San Miguel is offering to buy 88.5%, or about 4.4 billion shares of Eagle Cement, for 22.05 pesos each, the country’s largest conglomerate by assets said in a regulatory filing late yesterday. Ang—the president and CEO of San Miguel, and at the same time chairman of Eagle Cement—did not participate in the San Miguel board’s deliberations.
San Miguel is offering to buy Eagle Cement at a 43% premium from yesterday’s closing price of 15.40 pesos a share as the Philippines steps up the construction of infrastructure projects across the archipelago. Last month, the government awarded several contracts to jump start the construction of a 36-kilometer subway linking the nation’s main gateway Ninoy Aquino International Airport to Quezon City, north of the capital Manila. San Miguel itself is boosting investments in infrastructure projects, including a mega international airport project, toll roads and power plants.
The acquisition comes amid a robust earnings recovery at Eagle Cement, with its net profit jumping 77% to 6 billion pesos in 2021 from the previous year, surpassing pre-pandemic levels. Sales climbed 54% to 21.4 billion pesos in the same period as the company boosted its capacity to meet growing demand. Eagle Cement shares jumped as much as 30% to 20 pesos a piece in morning trading on the Philippine Stock Exchange. San Miguel shares rose 0.3% to 96.95 pesos each.
“Mirroring the recovery of the Philippine economy, demand for our products was strong across all our regional markets,” Ang said in Eagle Cement’s latest annual report. “Improvements in the economic backdrop and increase in construction activity, combined with our management team’s focus on execution enabled Eagle Cement to finish 2021 in a healthy financial position. Our strong financial results will allow us to invest in areas needed to grow or improve our assets and continue exploring strategic opportunities that will further extend our geographic and product portfolio.”
Ang—who acquired most of his San Miguel shares from the late tycoon Eduardo Cojuangco Jr. in 2012—transformed the company from a brewer and food manufacturer into one of the country’s most diversified conglomerates with interests in real estate, oil refining, power generation and infrastructure. With a net worth of $2.45 billion, Ang is ranked No. 9 on the list of the Philippines’ Richest that was published in August.