SUMMARY
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MANILA, Philippines (3rd UPDATE) – San Miguel Corp. sold some of its stake in power giant Manila Electric Co. (Meralco) to pension fund Government Service Insurance Sytem and the group of businessman Manuel V. Pangilinan on Friday, July 19.
In a disclosure to the Philippine Stock Exchange (PSE) Friday morning, the country’s biggest business group said it has placed a sell order for 63,333,330 Meralco common shares at P270 each, raising about P17.37 billion.
These shares are equivalent to about 5.7% stake in the power giant, reducing San Miguel’s 32.8% stake.
By Friday afternoon, GSIS and Pangilinan-led Metro Pacific Investments Corp (MPIC) both confirmed they bought the Meralco bloc shares when these were crossed at the exchange.
GSIS Vice President for Communications Marge Jorillo told reporters in a text: “GSIS bought Meralco shares but it is nowhere near majority of the bloc sold by San Miguel.”
MPIC acquired 10 million shares, according to MPIC vice president of communications Melody Del Rosario via a text message.
Meralco shares dropped 8.2% to P277.70 per share from the previous day’s closing price of P302. San Miguel’s stock price also declined by 0.34% to P87.50 apiece.
Deutsche Bank AG (Hong Kong branch) and Standard Chartered Securities (Singapore) Pte Ltd are the placing agents. San Miguel said the transaction is still subject to closing conditions and regulatory approvals.
Diversification
San Miguel president and COO Ramon Ang first mentioned in May the conglomerate was planning to sell the conglomerate’s entire stake Meralco at the “right price” to raise money for its foray into oil and gas exploration.
San Miguel, which has been diversifying away from its traditional food and drinks business for about a decade already, is also expanding its infrastructure and aviation portfolio.
It has gained control of legacy carrier Philippine Airlines (PAL), won the right to build and operate the NLEx Expressway project with its P11 billion bid, and is among the participants in the auction for the P17 billion Mactan-Cebu International Airport project.
Same 3 groups
This latest deal brings together 3 of the entities involved in a boardroom battle for control that became one of the biggest corporate events in 2008 and 2009.
San Miguel first acquired a stake in Meralco in 2008, when it beat the Pangilinan group in buying the stake of GSIS. The pension fund was then led by the feisty Winston Garcia who was at odds with Meralco’s controlling owners, the Lopez family.
San Miguel acquired GSIS’s 27% stake in 2008 at P90 per share, payable in 3 years.
The 2013 transactions reverses what was considered in 2008 as government’s retreat from its over 3-decade hold of a power distributor that had a checkered past.
San Miguel currently owns the second biggest ownership block in Meralco next to that owned by Pangilinan’s group.
Pangilinan gained control of Meralco by entering into a strategic agreement with the Lopez family. The Lopezes eventually divested almost all of their stakes in Meralco to focus on power generation business.
When Pangilinan was previously asked in a media briefing if his group is interested in acquiring Meralco shares San Miguel wants to sell, he replied that they would consider it if the deal involves “the right price.”
Meralco’s franchise covers 5 million households in Metro Manila and nearby areas. – Rappler.com
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