Metro Pacific and San Miguel Tollway Merger on Track for October 2024 Completion

The merger between Metro Pacific Tollways Corp. (MPTC) and San Miguel Corporation's (stock: SMC) tollways unit is moving forward and is expected to be finalized within October 2024. This development, announced by MPTC President and CEO Rogelio Singson, marks a significant step toward creating a unified entity that could reshape the Philippine tollway industry.

Singson confirmed that while the holding companies of both MPTC and SMC will merge, the operations of their respective tollways will not experience major disruptions. However, one crucial hurdle remains: regulatory approval from the Philippine Competition Commission (PCC). Singson noted that while management and ownership are ready, delays could occur due to the PCC's review process, which is required for such large mergers in order to prevent monopolistic practices and ensure fair competition in the market.

The merger will consolidate the tollway networks of MPTC and SMC, two of the largest infrastructure players in the country. MPTC operates key highways such as the North Luzon Expressway (NLEX), Subic-Clark-Tarlac Expressway (SCTEX), Cavite-Laguna Expressway (CALAX), and the Cebu-Cordova Link Expressway, while SMC runs the Tarlac-Pangasinan-La Union Expressway (TPLEX), the South Luzon Expressway (SLEX), the Skyway System, and the NAIA Expressway, among others.

This combination of assets would give the merged company control over a significant portion of the country's toll roads, streamlining operations and potentially improving efficiency. According to industry experts, this move could lead to better customer experience, reduced operational redundancies, and enhanced profitability due to the economies of scale.

One of the factors contributing to the acceleration of the merger timeline is MPTC’s recent acquisition of a 35% stake in PT Jasamarga Transjawa Tol (JTT), a major toll road operator in Indonesia. With this acquisition, MPTC’s overseas assets, particularly in Indonesia, help balance the scale of the merger against SMC's more extensive toll road operations in the Philippines. The integration of these Indonesian assets into the merger is seen as a critical piece of the deal, making the merger a near 50-50 split between the two companies.

Following the completion of the merger, there are plans to list the newly-formed tollway giant on the Philippine Stock Exchange. However, this will not take place until after the merger is finalized. Singson indicated that the company may choose to list both entities together, rather than pursue separate initial public offerings (IPOs).

This IPO is expected to draw significant interest from both domestic and international investors, given the size and market dominance of the merged tollway operator. Financial analysts have pointed out that the operational synergies brought about by the merger could make the company’s IPO highly attractive, particularly to investors seeking exposure to infrastructure development in the region.

While all signs point to the merger being finalized soon, the completion of the transaction will largely depend on how quickly regulatory approvals are secured. The PCC’s role is to ensure that mergers of this scale do not result in monopolies or unfair practices that could negatively impact consumers. As such, while the parties involved are optimistic about completing the deal within the month, delays could extend the timeline into early next year.

Singson, who is set to step down from his position as MPTC President and CEO, will be succeeded by Arrey Perez, the former head of Clark International Airport Corporation. Under new leadership, MPTC will continue to expand its reach, particularly through its growing presence in Indonesia and Vietnam, while also further strengthening its position in the Philippines.

Once the merger is complete, the unified company will dominate much of the tollway infrastructure in the country, including major expressways that connect Metro Manila to the northern and southern regions of Luzon. This consolidation could also signal the potential for new tollway developments in untapped areas, both locally and abroad.

• Merger Timeline: Expected to be finalized within October 2024, but pending regulatory approval.
• Companies Involved: Metro Pacific Tollways Corp. (MPTC) and San Miguel Corporation (SMC).
• Impact: The merger would streamline tollway operations across the Philippines, balancing MPTC’s international assets with SMC’s domestic presence.
• IPO Plans: Likely to follow the merger, with a potential listing on the Philippine Stock Exchange.
• Challenges: Regulatory review by the Philippine Competition Commission could delay the finalization of the merger.

This merger, once completed, will reshape the landscape of toll road operations in the Philippines and create a tollway behemoth capable of expanding its footprint in Southeast Asia.