The Philippine Competitions Commission (PCC) has approved the Consunji Group’s planned acquisition of a majority stake in Cemex Holdings Philippines Inc (CHP).

In a statement issued to the Philippine Stock Exchange, the group said that DMCI Holdings Inc, Dacon Corp, Seminar Mining and Power Corp have received a copy of the certificate issued by the PCC.

The certificate outlined the PCC’s approval of the joint acquisition of 100 per cent of Cemex Asian South East Corp (CASEC) from Cemex Asia BV.

CASEC holds an 89.86 per cent equity interest in publicly-listed CHP, which sells grey ordinary Portland cement, blended cement and masonry cement.

DMCI stated, “The clearance of the PCC is one of the conditions precedents to, and a regulatory requirement necessary before, consummating the joint acquisition.”

It added, “Completion of the transaction is subject to the satisfaction of various other conditions, including, but not limited to, completion for the sale and purchase of shares in each of APO Land & Quarry Corporation and Island Quarry and Aggregates Corporation, and the execution of the mandatory tender offer requirement by the Purchasers to the minority shareholders of CHP.”

The fourth-largest cement producer in the Philippines, CHP, reported losses of PHP1bn in 2022 and PHP2bn in 2023. This trend has been attributed to rising costs and stagnating sales volumes.

DMCI, a major Philippines-based engineering and infrastructure conglomerate, aims to return CHP to profitability by 2025, through acquisition synergies. DMCI’s Chairman and President, Isidro A Consunji, said, “We recognise CHP's operational and financial issues, but we are positive that we can turn it around by 2025 because of its ongoing capacity expansion and the clear synergies it brings to our group.”

He added, “While cement demand is currently soft, we expect it to rebound as our turnaround plan progresses, supported by the Build Better More program and the anticipated easing of interest rates next year.”

CHP is building a 1.5Mta integrated cement production line at its Solid plant in Antipolo, Rizal. The line is expected to become operational by September 2024.This expansion will double the company’s cement production capacity in the Luzon region. Additionally, it will boost CHP’s total installed production capacity by 26 per cent from 5.7Mta to 7.2Mta.

DMCI forecasts that power, fuel and other input costs, which make up 73 per cent of CHP’s cost of sales in 2023, to fall due to normalising market prices and the move to a more affordable energy supplier, Seminara Mining and Power Corp (SMPC). Furthermore, selling and administrative expenses, which accounted for 52 per cent of operating expenses in 2023, are expected to drop in response to talent and business process on-shoring, following the exit of Cemex.

Simultaneously, SMPC foresees a significant rise in its coal sales to CHP, expecting a 227 per cent rise to 500,000tpa compared to 2024 levels. As well as coal, the energy company can also supply CHP with 50MW of electricity and fly ash.

Furthermore, based on past consumption patterns, DMCI and DMCI Homes are expected to source around 400,000t of cement from CHP. This volume has the potential to expand further, subject to increases in DMCI’s order book and a recovery in DMCI Homes’ project launches.