M&A deals reach $3.4 billion in 6 months

MANILA, Philippines — The Philippines registered $3.4-billion worth of mergers and acquisitions (M&A) deals in the first half, driven by telecommunications and construction industries, according to PwC Philippines.

In a report, PwC said 42 M&A deals were registered in the first half, 12 percent higher than a year ago.

“The Philippines has shown strong performance in deals aimed at improving public utilities, positioning the country as an area of opportunity for growth in critical industries,” PwC said.

“During the first half of the year, deals in the country focused on modernization efforts in industries such as telecommunications and construction, driven by increased government efforts to attract foreign investments and develop infrastructure,” it said.

PwC said the Philippines’ M&A landscape has seen a surge in deals in the telecommunications and construction industries with the majority led by domestic investors.

“While there were significant inbound investments from Singapore, the largest deal of the year so far came from a joint acquisition deal with Japanese trading house Mitsui & Co. Ltd,” it added.

The report said deals in telecommunications and real estate highlight capitalization opportunities in sectors where asset development is being prioritized.

In addition, PwC said numerous transactions across the food and beverage industry have demonstrated growth initiatives from local companies, along with an increased potential for international expansion.

“Deals that focus on construction, specifically in infrastructure, reflect how government initiatives for development have affected the M&A landscape as a whole,” it said.

The report cited telecommunications, food and beverage, construction and renewable energy as the hottest M&A sectors in the Philippines.

PwC said the largest deal in the telecommunications space so far has been the acquisition of 1,012 towers from PLDT by Frontier Towers Associates Philippines, a subsidiary of Singapore-based telecom operator Pinnacle Towers Pte Ltd for P12.1 billion.

In addition, Unity Digital Infrastructure has committed to constructing 200 towers across the Visayas and Mindanao regions on top of the 447 towers it acquired from a deal with Globe Telecom.

“The increase in deal activity in the telecommunications industry is further stimulated by government initiatives. These include their goal of establishing 50,000 common network towers across the country and the recently signed Executive Order 32, which aims to streamline the operation of all network infrastructure by no longer requiring national or local permits to construct, maintain and operate,” the report said.

PwC said food and beverage deals have also remained a key factor in the country’s M&A space, with increasing interest in the distilled spirits market.

Notably, the Philippines saw one of its largest deals as Diageo PLC (Diageo) acquired Don Papa Rum for $473.2 million.

In terms of construction, PwC noted that government spending on infrastructure showed a 7.3 percent increase compared to the same period in 2022, from P183.2 billion to P200 billion, emphasizing the government’s plans to continue investing heavily in infrastructure over the medium term, with a target investment of five to six percent of gross domestic product.

Meanwhile, the report also mentioned the government’s efforts to attract foreign investment in the country such as the shift to a renewable energy profile for power generation companies.

It cited that the Philippines has the third largest geothermal capacity in the world at 1,900 MW, topped only by Indonesia and the United States.

“Initiatives by the government to tap into this potential include having renewable energy contribute 35 percent of the country’s power generation mix by 2030, and 50 percent by 2040. Given the moratorium on coal plants, power generation companies will also need to adapt their portfolio to expand,” PWC said.

Moreover, PwC noted that recent regulatory reforms in the country are seen to encourage foreign investment activity in M&As this year especially in emerging industries.

“In particular, the telecommunications and renewable energy sectors are poised for growth, and businesses can take advantage of this by prioritizing sustainability and modernization in their development strategies,” PwC said.

“The government’s focus on infrastructure development makes the country more attractive for M&A, driving innovation and business growth. With its favorable regulatory environment for foreign investment, growing economy, and focus on sustainable development, the Philippines offers a promising outlook for business expansion. Companies prioritizing strategic partnerships and expansion plans will have a competitive edge in this dynamic market,” it said.