MPIC rebuilds Meralco stake in P12.4-B deal

Metro Pacific Investments Corp. (MPIC) is building up its position in Manila Electric Co. (Meralco), agreeing to buy a 1.9-percent stake from San Miguel Corp.’s power arm for P12.4 billion.

San Miguel Global Power Holdings Corp. (SMGP) said in a disclosure on Friday that it signed a contract to sell 21,414,758 Meralco common shares to MPIC for approximately P580.99 apiece. The shares represent about 1.9 percent of Meralco’s total issued and outstanding common shares.

“MPIC agreed to purchase, and the Corporation agreed to sell, on Closing Date, 21,414,758 common shares in Meralco,” SMGP said.

The deal gives MPIC greater exposure to the power distributor while providing San Miguel with an immediate buyer for part of the Meralco block cleared for disposal just a day earlier.

The P12.4-billion transaction will be executed through a special block sale crossed at the Philippine Stock Exchange, with closing subject to the fulfillment of conditions under the agreement and completion of the required closing actions.

SMGP said it would make the appropriate disclosures once the transaction is completed.

A day earlier, SMGP’s board authorized the sale, transfer or conveyance of up to 46,596,596 Meralco common shares, either in full or in part.

The board also authorized company representatives to negotiate the price and other terms of any sale and execute the necessary agreements.

The MPIC transaction accounts for about 46 percent of the Meralco shares covered by that authority, leaving around 25.18 million shares that SMGP could still potentially dispose of.

SMGP has not disclosed whether it plans to sell the remaining shares.

The stake sale also comes as San Miguel’s power arm prepares to redeem all outstanding Senior Perpetual Capital Securities it issued in June 2021. Its board approved the redemption on 9 December, the securities’ step-up date.

The disclosures, however, did not state whether proceeds from the Meralco share sale would be used for the redemption.

Meralco booked a 3.8-percent increase in core net income to P26.5 billion in the first half of the year, driven partly by stronger contributions from its power generation business, while reported net income rose 11 percent to P26.3 billion.

The company, however, expects electricity prices to remain under pressure as Middle East geopolitical tensions keep global fuel markets volatile, with its average retail electricity rate already rising 15 percent to P13.09 per kilowatt-hour during the period.