0 Comments
Table of Contents
Manuel V. Pangilinan, chairman of Manila Electric Co. (Meralco), has agreed to acquire ₱2.19 billion worth of shares in the power distributor from San Miguel Global Power Holdings Corp. (SMGP), as the San Miguel group moves to unlock capital from its long-held investment and fund renewable energy projects.
San Miguel Corp. (SMC) said in regulatory disclosures that its power generation subsidiary had signed an agreement with Pangilinan for the sale of 3.767 million Meralco common shares at ₱580.99 apiece. The transaction, equivalent to about 0.33% of Meralco’s outstanding common shares, will be completed through a special block sale at the Philippine Stock Exchange.
Upon completion, Pangilinan’s direct stake in Meralco will increase to about 0.34%, according to SMGP.
The transaction forms part of a strategic disposal of SMGP’s minority interest in the country’s largest private electric distribution utility. The company had earlier agreed to sell 21.4 million Meralco shares to Metro Pacific Investments Corp. (MPIC), which is chaired by Pangilinan, for approximately ₱12.4 billion.
The MPIC transaction covers about 1.9% of Meralco’s outstanding shares. Once completed, MPIC’s direct and indirect interest in the utility will rise to about 49.4% from roughly 47.5%.
SMGP’s board had approved the sale of up to 46.6 million Meralco common shares, suggesting that the transactions are part of a wider plan to monetize its holdings in the distribution company.
Redirecting Capital
SMGP said proceeds from the share sales would support existing investments and renewable energy projects, consistent with San Miguel’s strategy of directing resources toward businesses where it has a more direct operating role.
The company’s portfolio includes natural gas, coal, hydroelectric power and battery energy storage systems. Its parent, led by Ramon S. Ang, has substantial capital requirements across its businesses, making the disposal of minority investments one way to raise funds for new projects or strengthen its financial position.
The transactions also allow San Miguel to realize gains on its Meralco investment. The ₱580.99 selling price is more than six times the ₱90 per share SMGP paid when it acquired the stake from state-run Land Bank of the Philippines (LANDBANK).
SMGP acquired a 3.8% interest in Meralco for ₱3.9 billion last year, resolving a long-running legal dispute between the parties. The investment originated from an arrangement dating back to December 2008, according to the company.
In explaining the investment’s history, SMGP said the original terms included fixed-term interest on the purchase price, which increased its overall cost. Prolonged litigation also delayed the transfer of the shares.
The company said it had not received dividends on the shares because ownership had yet to be transferred.
Forgone Dividends
San Miguel said the dividends that would have accrued on the shares over approximately 17 years amounted to an estimated ₱13 billion. Factoring in the cost of money over the period, SMGP estimates the value of those forgone dividends at about ₱21 billion in current terms.
The estimate reflects the financial implications of the prolonged dispute over the investment, although the dividend figures are the company’s own calculations.
Meanwhile, the sale price is indicative of the value San Miguel can now realize from the shares as it reallocates capital to other parts of its business.
For analysts, disposing of a minority stake can make strategic sense when a company needs funding for projects where it has greater operational control and potentially higher returns.
However, the move also means giving up future participation in the earnings and possible appreciation of the asset being sold.
Meralco serves more than 8.2 million customers in Metro Manila and nearby provinces, making it a significant infrastructure holding. Its controlling shareholder, Beacon Electric Asset Holdings Inc., is partly owned by PLDT Inc.
The transactions are expected to change the distribution of Meralco shares among its existing investors once the transfers are completed. SMGP said it would make the appropriate disclosures upon completion.
Shares of both San Miguel and Meralco rose on Wednesday. San Miguel gained ₱1.15, or 1.96%, to close at ₱59.90, while Meralco advanced ₱1.80, or 0.44%, to ₱414.
Source:
https://business.inquirer.net/614779/pangilinan-buys-meralco-shares-from-san-miguel-group-for-p2-19b