LafargeHolcim Quits Philippine Sale After Deal Collapses

(Bloomberg) -- LafargeHolcim Ltd. has abandoned its plan to sell 85.7% in Holcim Philippines Inc. after a deal with San Miguel Corp. has lapsed without approval from the nation’s antitrust regulator.

“We have decided to no longer sell our business in the Philippines,” LafargeHolcim spokeswoman Eva Mairinger said, declining to comment on how much money the Switzerland-based company lost from the failed sale. Holcim Philippines had a total enterprise value of $2.15 billion when the deal was announced last year and Davy analyst Robert Gardiner said failure to complete the transaction deprives the group of 1.84 billion francs ($1.9 billion) in cash proceeds.

The collapsed deal marks another blow to Chief Executive Officer Jan Jenisch’s strategy of cost cutting and reducing debt, which included the sale of businesses in Malaysia, Indonesia and Singapore. In light of the coronavirus spread in March, the world’s largest cement maker had to pull its 2020 guidance and currently expects the biggest impact from the pandemic in the second quarter.

Its shares fell as much as much 2.4% on the news, the most in a week, making LafargeHolcim the worst performer in the Stoxx 600 Construction and Materials Index.

“The failed sale is disappointing, but no drama as the deal wasn’t crucial for LafargeHolcim to keep its liquidity at a relatively strong level,” Bloomberg Intelligence analyst Sonia Baldeira said, adding that its debt already dropped by 35% in 2019 -- excluding any proceeds from the Philippine unit sale.

Read More: LafargeHolcim Remains Liquid Despite San Miquel Deal Fail: React

LafargeHolcim had 8 billion francs in liquidity at the end of the first quarter and plans to pay out a dividend of 2 francs per share for the financial year 2019. It is scheduled to hold its annual general shareholder meeting tomorrow.

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