MVP eyes more Meralco shares

business mirror

TUESDAY, 24 MAY 2011 22:34 MIGUEL R. CAMUS / REPORTER

The group of businessman Manuel V. Pangilinan says there is room to increase its stake in Manila Electric Co. (Meralco), even after paying P13 billion to buy a 4-percent interest from the open market and a private investor, bringing its ownership in the electricity retailer to a dominant 45 percent.

The Pangilinan-led firms Metro Pacific Investments Corp. (MPIC) and PLDT Communications and Energy Ventures Inc. (PCEV) acquired on Tuesday about 45.4 million Meralco shares through unlisted Beacon Electric Asset Holdings Inc.

The deal will be funded with P11 billion worth of bank borrowings arranged by First Metro Investment Corp. and PNB Capital and Investment Corp. The remaining P2 billion will come from cash extended by Beacon Electric, an MPIC spokesman said.  

Based on figures provided by the MPIC management, the shares were acquired at an average price of P286 each, or an 18.67 premium to Meralco’s closing price the previous day.

David Nicol, chief financial officer of MPIC, said the group remains on the lookout for an increase in its current ownership.  

“If we can secure more at the right price, then sure. But we are not looking to get over 50 percent,” Nicol said in a phone interview on Wednesday.

The group’s current interests place it a step closer to the final tender offer threshold of 51 percent which, when breached, would force it to make a costly buyout offer to other shareholders of Meralco, which include competitor San Miguel Corp. (SMC).  

MPIC declined to identify the private seller of the shares, who reportedly owned bulk of the stock acquired on Wednesday.

Notable stockholders of Meralco include SMC (33.2 percent), the Lopez-led First Philippine Holdings Corp. (6.6 percent) and the group of stockbroker and businessman Eusebio Tanco (4 percent).

Meanwhile, the latest move further bolstered Beacon Electric’s stake to 38.8 percent, while PCEV continues to hold another 6.1 percent.

It also comes ahead of the electricity retailer’s plan to build a power-generation portfolio of 1,500 megawatts through 2016, to cost at least $2 billion.   

“Control is also important at this point, as it will dictate what [Pangilinan] wants to do with Meralco,” George Ching, equities analyst with CitisecOnline said in a phone interview on Tuesday.

Meralco shares closed slightly higher by 0.66 percent to P242.6 each, beating the main index, which sank 0.85 percent on negative sentiments abroad.

Ching attributed the tamer movement to investors being more cautious this time around, given that Pangilinan’s group in 2009 managed to avoid making a tender offer to shareholders of Meralco.

“The last time people were somewhat speculating that there is going to be a tender offer. But MPIC had already said they are trying to avoid this,” he added, noting that fundamentally, Meralco is still an attractive company given the nature of its business.

MPIC, a holding firm with interests in toll roads, water infrastructure, hospitals and power, declined 1.75 percent to P3.36 each on Tuesday. PCEV, a former telecommunications provider with a public float of 0.5 percent, jumped 12.72 percent to P6.20 each.

MPIC and PLDT are units of the Hong Kong-listed First Pacific Co. Ltd., where Pangilinan sits as chief executive and managing director.