Gokongwei Group's Acquisition of Roxas Holdings Assets in Negros Approved

Universal Robina Corporation (URC) can proceed with its planned acquisition of assets owned by Roxas Holdings Inc. (RHI) after the Philippine Competition Commission (PCC) found it does not lead to substantial lessening of competition in sugarcane milling in the Negros region.

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The transaction involves URC’s purchase of assets in Central Azucarera de la Carlota, Inc. (CA-Carlota) and Roxol Bioenergy Corp. (Roxol), both subsidiaries of RHI—including the sugar mill and bio-ethanol plant, as well as RHI shares in Najalin Agri-ventures, Inc. (NAVI) in La Carlota City, Negros Occidental.

The PCC said it approved the transaction considering the overlaps and the market where both sugar millers operate.

“While PCC noted that URC and CA-Carlota are among the big players in the area, the review finds that the transaction does not lead to substantial lessening of competition in the sugarcane milling and tolling markets in Negros region, as well as the national markets for bioethanol, wholesale raw sugar, and molasses,” the commission said in a news release. 

The decision comes one year after the PCC blocked URC’s attempt to take over Central Azucarera Don Pedro Inc. (CADPI) and RHI—its sole rival in Batangas—after market investigation revealed competition concerns the proposed merger leads to “a monopoly of sugar milling services and will corner farmer-planters in their sharing agreements, sugar recovery rates, and incentives in Southern Tagalog.” 

“The acquisition by the same parties over the assets in Negros, however, presents a different market environment considering the many players, planters’ strength in numbers translated as bargaining power, and the competitive constraints throughout the country’s sugar producer capital,” the PCC said. 


URC, a unit of the JG Summit conglomerate, is set to acquire all buildings, refinery and milling plants, other assets of CA-Carlota; the bio-ethanol plant of Roxol, as well as the sellers’ 1,069,037 sqm. and 391,826 sqm. land in La Carlota City, Negros Occidental. The company will also take 520,115 Najilin common shares held by RHI and its nominee shareholders.

"Synergies in the sugar industry"

In a disclosure to the Philippine Stock Echange Commission, URC said the acquisition “will create synergies in the sugar industry in Negros Occidental…(and) is expected to enhance capability of URC to provide good milling services to the sugarcane planters.”

Meanwhile, RHI said it “will use the proceeds of the Proposed Sale Transaction to prepay all long-term debt and reduce short-term debt to levels sufficient for its working capital needs. The sale of the La Carlota assets will allow RHI to refocus its resources on rebuilding its Nasugbu sugar milling and refining facilities, among others.”

The total amount of the transaction was not immediately disclosed, although RHI said it represents “a fair market value for the plant and equipment, as well as the building and land, and investment shares.” 

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Paul John Caña
Associate Editor, Esquire Philippines
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