SMC gets add’l Landbank shares in Meralco
San Miguel Corp., led by tycoon Ramon Ang, has pumped up its position in Manila Electric Co. (Meralco) with the acquisition of additional shares that Land Bank of the Philippines was compelled by the court to sell.
However, an analyst has warned this may spark competition checks.
Through a special block sale at the Philippine Stock Exchange, energy arm San Miguel Global Power Holdings Corp. disclosed that it had purchased 1.034 million common shares of Meralco from the Land Bank on Aug. 22.
The transaction was valued at P93 million, with each share priced at P90. This was way lower when drawing from the closing price on Aug. 22, with Meralco’s share priced at P547 per share. From that, the present market value of the acquisition could be pegged at about P566 million.
17-year-old pricing
This came just a month after the conglomerate had taken over about 43.23 million Meralco shares, allowing the Ang-led group to get 3.8 percent stake in the power distributor giant. The additional shares are equivalent to a 0.09-percent stake.
Traced back to a disputed 17-year-old deal with LandBank, San Miguel Global Power had secured the first tranche for only P3.89 billion—a whopping 83 percent discount when compared to the current market value of P23 billion.
The price was under a 2008 share-sale agreement that the courts had directed the state-owned bank to follow. This happened as the prolonged court litigation and subsequent loss to San Miguel prevented Landbank from monetizing its Meralco shares at prices closer to market valuations, or even from considering a deal with any other party.
From the two block sales, SMC’s acquired shares now stand at 44.26 million, inching up its interest in Meralco to 3.9 percent.
Peter Garnace, equity research analyst at Unicapital Securities Inc., said that the fresh acquisition was likely part of the total 46.6 million share sale between San Miguel Global Power and the state-run bank.
Another block sale involving more than 2.3 million is seen to complete the transaction.
Garnace said the investment from this acquisition could help support Meralco’s long-term growth.
“Although we caution that since SMGP is a major player in the power sector, a big stake in the country’s largest distribution utility may prompt closer regulatory and competition scrutiny,” he told Inquirer on Tuesday.
