File photo from AES Corporation's website
MANILA, Philippines – The Philippine Competition Commission (PCC) approved the $1.9-billion acquisition by San Miguel Corporation (SMC) of a nearly 1,000-megawatt (MW) coal power plant from American firm AES, one of the largest deals in Philippine corporate history.
In a decision released on Monday, February 26, the Mergers and Acquisitions Office (MAO) of the PCC found that the transaction does not result in substantial lessening of competition in the power generation and retail electricity markets.
"There remains sufficient competitive restraints from competitors in the relevant markets after the acquisition. The transaction is not likely to substantially increase the likelihood that the parties will engage in a coordinated behavior," the PCC said.
The transaction involves SMC's power unit, SMC Global Power Holdings Corporation, acquiring 100% of Masin-AES Pte Ltd from AES Phil Investment Pte Ltd and Gen Plus BV, as well as full control of AES Transpower Private Ltd and AES Philippines Incorporated.
The acquisition was to gain control of a coal power facility in Masinloc, Zambales with a current output of 630 MW and another unit in construction which will add 300 MW by next year.
The facility also has the infrastructure to be able to expand by another 300 MW.
The deal adds substantially to SMC Global Power's installed capacity which, prior to the deal, stood at 2,903 MW, representing around 22% of the Luzon grid and 17% of the national grid.
The PCC noted that SMC Global Power's portfolio in the relevant market includes Sual Power Plant in Sual, Pangasinan; San Roque Hydroelectric Multipurpose Power Project in San Manuel, Pangasinan; Ilijan Power Plant in Ilijan, Batangas; Limay Greenfield Clean Coal Plant in Limay, Bataan; Angat Hydroelectric Power Plant in Angat, Bulacan; and greenfield power plants in Malita, Davao del Sur and Limay, Bataan.
Since its establishment in 2016, the PCC has been notified of 151 mergers and acquisitions, 41 of which were global mergers, with a combined worth of P2.25 trillion.
The antitrust watchdog recently voided Udenna Corporation's merger with a Dutch shareholder of 2GO Corporation due to the firm's failure to notify the commission of the deal.
Under the law, the PCC should be notified for mergers or acquisitions with transaction values above P1 billion. The commission has said, however, that it is considering raising the P1-billion threshold. – Rappler.com