Stockholders of Union Cement OK share swap deal with CEMCO

Publicly-listed Union Cement Corp. said its shareholders have approved the proposed share swap between the company and CEMCO Holdings Inc. which would allow Union Cement to acquire a controlling interest in the Alcantara-owned Alsons Cement Corp.

In a disclosure to the Securities and Exchange Commission, Union Cement said the share swap involves the issuance of 1.097 billion new common shares of Union Cement in exchange for 4.062 billion shares held by CEMCO in Alsons Cement.

Union Cement would swap shares at a ratio of one new Union Cement share for 3.7 shares of Alsons Cement.

The swap, once implemented, will result in the acquisition by Union Cement of 88 percent of Alsons Cement.

Shareholders of Union Cement also approved a one-time denial of their preemptive rights to enable the acquisition of Alsons Cement shares which would be "for corporate purposes" and an additional investment in the cement business.

They also approved the listing of the new shares on the Philippine Stock Exchange.

Union Cement believes the acquisition of Alsons Cement will solidify its position as one of the largest cement manufacturers and distributors in the Philippines and provide significant opportunities for both companies to realize revenue and cost synergies in the immediate future and over the long term.

Oscar Hilado, vice-chairman of Union Cement, said "the proposed transaction is a win-win situation for both Union and Alsons Cement shareholders as each group is expected to enjoy a significant uplift in the shareholder value as a result of the transaction. We expect to be able to successfully leverage our significant market shares in order to further reduce costs and improve operating and marketing efficiencies."

Upon closing of the share swap transaction, Union Cement said it would implement a tender offer to the rest of Alsons Cement shareholders under similar terms offered to CEMCO. Alsons Cement shareholders can sell their shares at P0.28 per share.

Union Cement operates three cement plants in Northern and Central Luzon and one plant in Mindanao. It has a market share of approximately 22 percent of the local cement market and its plants have a total cement capacity of 5.5 million tons per year.

Alsons Cement, on the other hand, currently operates two dry process lines in Northern Mindanao with a combined cement capacity of two million tons per year and holds eight percent of the domestic cement market.

After two consecutive years of net losses, Alsons Cement finally made it in the black with profits of P62 million last year, primarily due to an extra-ordinary gain on the sale of its shares in Iligan Cement Corp.

Union Cement, formerly Hi Cement Corp., is the surviving entity from the merger of the three Phinma-managed companies, namely Bacnotan Cement Corp., Davao Union Cement Corp., and Hi Cement Corp.

The company produces three types of portland and pozzolan cement. All of Union Cement’s product lines are marketed under the "Union" brand name, which is the best-selling cement brand in the Philippines. – Zinnia B. dela Peña