JG Summit slashes URC stake to raise funds for Meralco acquisition

Business World Online

Posted on October 04, 2013 06:47:36 PM

GOKONGWEI-LED JG Summit Holdings, Inc. has sold P12 billion worth of shares of its food and beverage unit to partially bankroll acquisition of a stake in Manila Electric Co (Meralco).

"On Oct. 3, JG Summit sold 105 million Universal Robina Corp. (URC) ordinary shares via an accelerated overnight equity placement at a price of P115 per share, representing a 6.5% discount to the previous closing price," the conglomerate said in a disclosure on Friday.

"The sale raises approximately P12 billion for the company and the proceeds will be used for general corporate purposes."

In a text message, JG Summit Senior Vice-President Bach Johann M. Sebastian confirmed that the P12 billion will be used to partially fund acquisition of a stake in country’s largest power distributor. JG Summit early this week said it would buy San Miguel’s 27% stake in Meralco for "approximately P72 billion".

The deal, which is still subject to requisite closing conditions, will be financed through a combination of equity sale and bank loans, JG Summit earlier said.

The deal marks JG Summit’s foray into electricity distribution, which adds to the conglomerate’s existing portfolio that now includes airlines, real estate, banking and petrochemicals.

Following the share sale, JG Summit’s stake in URC has been diluted to 55.7% from 60.55%.

JG Summit’s net income grew 13.37% to P14.84 billion in the first half from P13.09 billion in the same six months last year.

URC’s net income increased 38.50% to P8.49 billion in the nine months ending June from P6.13 billion a year ago.

On Friday, shares of JG Summit gained P1.20 or 2.94% to close P42.00 apiece from P40.80 on Thursday, while those of URC lost P6 or 4.88% to end P117 each from P123. -- Cliff Harvey C. Venzon   source