PCC approves investment of Ayala in Phinma Energy

The Philippine Competition Commission said Monday it cleared the acquisition of a 68.45-percent stake in Phinma Energy Corp. by Ayala Group’s AC Energy Inc.

“Upon the review of the findings and recommendation of the Mergers and Acquisitions Office and the parties’ submissions, the commission finds that the proposed acquisition by AC Energy of shares in Phen will not likely result in the substantial lessening of competition,” PCC said in a decision dated April 11.

The transaction involves the acquisition by AC Energy of the shares of stock of Phinma Corp. and Philippine Investment Management Phinma Energy and a subscription by AC Energy to new common shares. This would result in AC Energy’s ownership of 68.45 percent of Phinma Energy.

Ayala Corp. announced in January this year AC Energy signed an agreement to acquire a majority stake in Phinma Energy for P3.42 billion.  AC Energy said it would acquire Phinma’s combined 51.48-percent stake in Phinma Energy via a secondary share sale. The Ayala unit signed the agreement with Phinma Corp. and Philippine Investment Management Inc. 

“Phinma was one of our early partners when Ayala was new to the power sector. This partnership has prospered over the last eight years and we welcome the opportunity to now integrate Phinma Energy into AC Energy’s platform as we grow our presence in the power generation sector,” Ayala Corp. chairman and chief executive Jaime Augusto Zobel de Ayala said in a statement in January.

Phinma owns 1,283,422,198 common shares in Phinma Energy while Phinma Inc. owns another 1,233,642,502 common shares.  AC Energy also subscribed to 2,632,000,000 new common shares of Phinma Energy.

PCC said it found no competition issues arising from the transaction because the competitive constraints were from other players in the markets for power generation for bilateral contracts and the provision of Retail Electricity Supply services in Luzon and Visayas. 

The antitrust body said the transaction would not significantly strengthen the ability or incentive of the merged firm to engage in customer or input foreclosure. 

It said that based on its merger review involving the power sector, the transaction would not substantially increase the likelihood that the said power companies would engage in anti-competitive coordinated behavior with other power generators.

AC Energy is the energy platform of Ayala Group and is one of the energy companies with more than $1 billion of invested and committed equity in renewable and thermal energy in the country and around the region. The company aspires to develop 5 gigawatts of attributable capacity and generate at least 50 percent of energy from renewables by 2025.

The Phinma Group was established in 1957 and became the foremost producer of cement from the 1970s through 2002. It is now engaged in a diverse range of industries such as energy, education, housing, construction materials and hotels through two main holding companies: Phinman Inc. and listed Phinma Cop.

Meanwhile, PCC also approved the acquisition by Longview Aircraft Company of Canada Limited of the Q Series aircraft program from Bombardier Inc.

Longview Aircraft is set to acquire Dash 8, also known as the Q Series, aircraft program and related assets from Bombardier pursuant to an asset purchase agreement in November 2018.

PCC said it approved the transaction as both aircraft firms have limited presence in the Philippines with no existing overlapping line of businesses and vertical relationship between the companies. 

Both companies are Canada-based.

Topics: Philippine Competition Commission , Phinma Energy Corp. , Ayala Group , AC Energy Inc.
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