The Philippine Competition Commission (PCC) entered the second phase of its review of the proposed acquisition by International Container Terminal Services, Inc. (ICTSI) of 50% shares in Manila North Harbour Port, Inc. (MNHPI).
In a statement, PCC said its Mergers and Acquisitions Office (MAO) decided to move to phase two of the review on November 15, pursuant to Section 17 of Republic Act (RA) No. 10667, or the Philippine Competition Act.
The competition body said initial market investigation conducted by MAO indicates the transaction “may affect the port industry, particularly the markets for the provision of port operation and transshipment services in the Port of Manila.”
In accordance with R.A. 10667 and its implementing rules, MAO has 60 days from November 15, 2018 within which to conduct the second-phase review.
PCC added that entering the second phase of review does not mean that MAO has made a definitive finding of substantial lessening of competition or has prejudged the review.
It said this only signifies that a more detailed analysis of the transaction is required using additional information from ICTSI, MNHPI, and third parties.
ICTSI in September last year signed a share purchase agreement with Petron Corporation to acquire 10.449 million MNHPI shares of the latter, representing 34.83% of the total issued and outstanding shares. In September this year, ICTSI signed a share purchase agreement with Harbour Centre Port Terminal, Inc. (HCPTI) to acquire 4.550 million shares in MNHPI from HCPTI.
PCC said post-transaction, ICTSI will own and control 50% shareholdings in MNHPI, with the remaining shares held by San Miguel Holdings Corporation at 43.33%, IZ Investment Holdings, Inc. at 6.50%, and Petron Corporation at 0.17%.
With the planned MNHPI acquisition, ICTSI will be having interests in both international and domestic port operations in Manila. ICTSI operates and develops ports around the world, with Manila International Container Terminal as its flagship operation. Its subsidiaries also operate ports in Subic, Misamis Oriental, Davao del Norte, and General Santos, among others.
MNHPI, on the other hand, has a 25-year concession to modernize and operate domestic terminal North Port in Manila North Harbor under a Philippine Ports Authority contract.
ICTSI said the transaction will allow it to contribute its experience, expertise and state-of the-art technology and infrastructure to enhance the operational efficiency of North Port and improve the traffic condition in Metro Manila.
“This transaction will further improve the returns of ICTSI’s shareholders through this value-accretive acquisition,” it said in an earlier statement.