The share price of Cemex Holdings Philippines Inc. (CHP) plunged on Friday after DMCI Holdings Inc. reported that it is acquiring a controlling stake in CHP’s parent firm at P1.42 per share, below market expectations.
CHP shares were heavily sold down, dropping by as much as 28.4 percent to P1.36 per share from the previous day’s close of P1.90. It was the second top decliner Friday.
CHP’s stock went as high as P2.30 a few days before news broke out that DMCI was in talks to purchase CHP.
DMCI on Thursday reported that it signed a share purchase agreement to acquire 100-percent stake in Cemex Asian South East Corp. (CASEC) for $305.6 million. CASEC owns 89.86-percent equity interest in CHP.
DMCI said the $305.6-million acquisition prices implies an equity value of $340.1 million for CHP.
“CHP equity value of US$340.1 million divided by the total outstanding shares of 13,489,226,623 would result in P1.42 per share of CHP,” DMCI said.
“The consideration reflects the result of the negotiations and views on fair value of both the Purchasers and Seller, having regard to various valuation methodologies and multiple cross-checks,” it said.
DMCI said adding cement manufacturing into its portfolio strategically leverages DMCI Group’s expertise. The acquisition will also introduce new revenue streams, diversify its financial base and mitigate risks associated with the volatility of commodity prices, it said.
The conglomerate has investments in coal mining, power generation, nickel mining and real estate.
CHP owns and operates APO Cement Corp. and Solid Cement Corp. which are engaged in the production, sale and distribution of cement and other buildings materials in the country.
It also has a 40-percent indirect equity interest in each of APO Land & Quarry Corp. and Island Quarry and Aggregates Corp.
CHP is the country’s fourth-largest cement maker with an installed annual capacity of 5.7 million tons. It was listed on the Philippine Stock Exchange in July 2016.
The deal is expected to be finalize before end-2024, subject to the satisfaction of closing conditions, including the approval by the Philippine Competition Commission and the fulfillment of any mandatory tender offer to the minority shareholders of CHP.
The deal is part of Cemex Asia’s wider divestment of its Philippine assets.