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Beginning on March 1, a higher merger and acquisition threshold
From March 1, the Philippine Competition Commission (PCC) will increase the requirement for required merger and acquisition (M&A) deal notification.
The PCC stated in a statement that starting on March 1, 2023, mergers and acquisitions that exceed a Size of Party (SoP) of PHP7 billion and a Size of Transaction (SoT) of PHP2.9 billion would require notification to the PCC for a required merger review.
The Bayanihan 2 Act expired in September of last year, and the PCC has set the M&A threshold for SoP and SoT at PHP6.1 billion and PHP2.5 billion, respectively.
SoT is the worth of the assets or revenues of the acquired firm and the entities it controlled, whereas SoP is the total value of assets in the Philippines of the ultimate entity of one of the parties to a transaction.
For a merger or acquisition deal to need a mandatory notification to PCC, both levels must be reached.
The levels for mandatory merger and acquisition notifications have been “recalibrated,” according to the commission, “marking an increase to reflect developments in the economy confronting high inflation and reeling from the consequences of the pandemic.”
The nation’s gross domestic output increased by 7.6% in 2022.
In contrast, inflation reached a high of 8.7 percent in January 2023.
The SoP and SoT limits have been set at PHP1 billion since the Philippine Competition Act (PCA) was passed into law.
Before the pandemic, the SoP threshold increased to PHP5 billion in 2018, PHP5.6 billion in 2019, and PHP6 billion in 2020.
While this was happening, the SoT threshold rose to PHP2 billion in 2018, PHP2.2 billion in 2019, and PHP2.4 billion in 2020.
While the epidemic was at its worst, M&A thresholds were at PHP50 billion.
The total value of the M&A transactions that the PCC has so far approved is PHP4.94 trillion.
Manufacturing (51 deals), finance and insurance (42), real estate (33), energy and gas (27), and transportation and storage (19) round out the top five industries with the greatest number of M&A agreements, according to the commission.***
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