Tycoon Manuel V. Pangilinan is further strengthening his grip on power giant Manila Electric Co. (Meralco) through a P12.4-billion stake deal with business partner Ramon Ang.
Pangilinan-led Metro Pacific Investments Corp. (MPIC) has agreed to acquire 21.4 million common shares or 1.9 percent of Meralco from Ang’s San Miguel Global Power Holdings Corp. (SMGP) at P580.99 apiece via a special block sale.
The transaction, subject to closing conditions, carries a 16.2-percent premium over Meralco’s 90-day volume-weighted average price of P500.09 per share as of Sept. 30.
The purchase price is also more than six times the P90 per share SMGP paid when it acquired the Meralco stake from state-run Land Bank of the Philippines.
MPIC will fund the transaction using a mix of internally generated cash and financing.
Upon the deal’s closing, MPIC’s direct and indirect shareholding in Meralco will increase to around 49.4 percent from 47.46 percent.
MPIC, whose interests span power, toll roads, water, health care, real estate, light rail and agribusiness, said the transaction reflects its continued confidence in Meralco’s long-term growth prospects.
Meralco is the country’s largest power utility, serving more than eight million customers in Metro Manila and nearby provinces.
SMGP, the power arm of Ang’s San Miguel Corp. (SMC), acquired around 46.6 million Meralco common shares from Landbank through special block sales on the Philippine Stock Exchange last year.
In a special meeting on Thursday, SMGP’s board of directors approved the sale, transfer and conveyance of all or part of the shares.
Sought for insights, China Bank Capital Corp. managing director Juan Paolo Colet told The STAR that SMC could use the P12.4-billion proceeds to pay down debt and fund capital expenditures.
For MPIC, Colet said the transaction shows the MVP Group ‘remains very confident in the future of Meralco’ despite uncertainty surrounding system loss charges.
Pangilinan, who chairs Meralco, earlier warned that power utilities ‘may not survive’ if they alone shoulder the costs of removing system loss charges from electricity bills.
System loss charge refers to the fee that power utilities currently recover from consumers to cover electricity lost before it reaches homes and businesses.
During his penultimate State of the Nation Address, President Marcos called for the removal of the charge.
Meanwhile, Globalinks Securities and Stocks Inc. head of sales trading Toby Allan Arce said the Meralco share sale is ‘strategically more significant’ to MPIC than to SMC, further consolidating the former’s position in the utility giant.
‘For investors, the more interesting question now is whether San Miguel intends to monetize the remainder of its Meralco position and how MPIC ultimately manages a stake approaching 50 percent,’ Arce told The STAR.
Following news of the transaction, Meralco shares closed 0.29 percent lower at P416 apiece yesterday.