The food and beverage manufacturer told the stock exchange on Monday it had received the go-ahead from the Philippine Competition Commission (PCC) to buy Roxas Holdings’ operations in Negros Occidental.
Roxas Holdings made the same disclosure, noting URC and itself will “aim to secure the other closing conditions, as may be applicable, and shall work towards closing the asset sale transaction at the soonest possible time.”
URC and Roxas Holdings first announced in June their plans to sell the latter’s assets in La Carlota City, Negros Occidental. The transaction involves buying Roxas Holdings’ shares in Najalin Agri-Ventures, Inc.
The PCC said it approved the deal as it sees no substantial lessening of competition emerging from the transaction.
“The acquisition… presents a different market environment considering the many players, planters’ strength in numbers translated as bargaining power, and the competitive constraints throughout the country’s sugar producer capital,” it said in a statement.
To recall, the PCC rejected a plan by URC to buy the operations of Roxas Holdings and Central Azucarera Don Pedro, Inc. in Batangas last year.
It said that unlike in the case of Batangas where sugar planters only had a choice between two players, sugarcane farmers in Negros work in associations with bargaining power, and therefore, are able to get the best price for their produce.
Once the companies finish other closing conditions, URC will take control of Roxas Holdings’ Negros operations, including all buildings, machineries and equipment, laboratory equipment, and the land on which these stand.
The company intends to continue using these facilities for sugar milling and bio-ethanol production.
“The acquisition by URC of the sugar milling and bio-ethanol distillery assets will create synergies in the sugar industry in Negros Occidental. This transaction is expected to enhance capability of URC to provide good milling services to the sugarcane planters,” it said.
For Roxas Holdings, the proceeds from the sale will be used to prepay long-term debt and reduce short-term debt.
“The paring down of existing debts is expected to result in a stronger balance sheet for the [Roxas Holdings] Group, and in capacity to rebuild its operations in Nasugbu, Batangas,” it said.
In the six months ending June, the attributable net earnings of URC grew 8% to P5.53 billion, while the attributable net loss of Roxas Holdings was reduced 34% to P427.77 million.
On Monday, shares in URC climbed P1.10 or 0.79% to P140 each, while shares in Roxas Holdings picked up 22 centavos or 12.79% to P1.94 each. — Denise A. Valdez||BusinessWorld
Source: Peso Economics
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