UPDATE 1-LafargeHolcim to keep Philippines business after San Miguel deal collapses

(Adds company comment, analyst, detail)
ZURICH, May 11 (Reuters) - LafargeHolcim LHN.S has decided
to keep its $2.15 billion Philippines business after a deal to
sell the operation collapsed, the world's biggest cement maker
said on Monday.
The agreement to sell four cement plants and one grinding
plant to San Miguel Corporation SMC.PS fell apart after the
Philippines Competition Authority (PCC) did not give approval in
time.
"With today's unprecedented global health crisis, the world
has changed dramatically," LafargeHolcim said of its strategy
switch.
"Given today's new reality, we have decided to no longer
sell our business in the Philippines. The Philippines is one of
the most high-growth countries in the Asia-Pacific region and we
intend to maintain our leadership position there."
The Swiss company, which last month said it expects a speedy
recovery for the construction sector when coronavirus
restrictions are lifted, said it was well positioned to grow in
the Philippines, where it had sales of around 650 million Swiss
francs ($668 million) in 2019. It also had ample liquidity to cover its obligations with 8
billion francs in cash and unused committed credit lines, it
added.
Analysts were not surprised by the failure of the deal after
the PCC had raised concerns it could lead to increased market
power and a possible monopoly for San Miguel.
" Holcim Philippines operates in a high-growth market and is
profitable, but the divestment would have helped LafargeHolcim
to reduce its net debt by 1.8 billion Swiss francs," said Bank
Vontobel analyst Bernd Pomrehn.
"However, even without this transaction we expect the
company's deleveraging to proceed," he added.
LafargeHolcim's stock fell 1.6% by midday.
LafargeHolcim announced the sale of its entire 85.7% stake
to industrial group San Miguel in May 2019 and was expected to
complete the transaction by the end of 2019.
"The PCC did not issue an approval of the transaction within
the required time period and consequently the agreement lapsed,"
LafargeHolcim said.
LafargeHolcim has been offloading assets to pay down debt
and wanted to exit what it has previously called the
"hyper-competitive" South-East Asia market.
The Swiss company has also quit Indonesia, Malaysia and
Singapore, where its businesses together with the Philippines
operation were worth $4.9 billion.
LafargeHolcim said three of its four plants in the
Philippines that had been shut down due to the coronavirus
crisis had now resumed operations.
($1 = 0.9728 Swiss francs)