SEC okays 3-way merger of cement firms

The three-way merger of the cement units affiliated with the Phinma Group of Companies was approved by the Securities and Exchange Commission last Tuesday, formally creating the country's biggest cement company with about 25 percent of total Philippines production capacity.

After the respective stockholders of Bacnotan Cement Corp., Davao Union Cement Corp. and Hi-Cement Corp. ratified the merger last November, the SEC approved the share-for-swap transaction with Hi Cement as the surviving entity, but to be later renamed as Union Cement Corp.

With the merger, the three companies, all producing the "Union" brand of cement, will have a combined annual clinker capacity of 5.7 million metric tons from four plants in La Union, Bulacan and Davao; four bulk terminals; and three ports, making it the only Philippine cement manufacturer with a truly nationwide marketing and distribution network.

The merged block, with a capital stock of P10 billion, will be 45 percent owned by Hi Cement, 39 percent by Davao Union and 16 percent by Bacnotan Cement. After the merger, the public will own approximately 26 percent of the merged entity. The Phinma Group of Holderbank Financiere Glaris Ltd., the world's largest cement producer, will jointly own about 62 percent. Other large shareholders include the Sumitomo Corp. and Sumitomo Osaka Cement Corp. of Japan, and FLS Industries of Denmark, the world's biggest producer of cement manufacturing equipment.

Bacnotan Cement resulted from the spin-off of the La Union cement plant and quarry plant of Bacnotan Consolidated Industries.

Davao Union, meanwhile, is a top cement producer in the southern part of the Philippines, supplying the commercial centers, housing projects and government infrastructure requirements in Visayas and Mindanao.

Hi-Cement, on the other hand, is the second biggest cement manufacturer in the country with about 10 percent of national production and nine percent of total sales.

The company operates a plant of Norzagaray, Bulacan and serves the big Luzon market, including Metro Manila, which accounts for 60 percent of cement sales in the Philippines.