By Rosemarie Francisco
MANILA, Nov 5 (Reuters) - The PLDT group forged a $471 million deal on Thursday for a 6.7 percent stake in Manila Electric Co (Meralco), edging out rival San Miguel Corp and cementing its control over the utility.
First Philippine Holdings, the holding firm of the Lopez business clan, said it had agreed to sell 6.7 percent -- half of its holdings -- in Meralco to Metro Pacific Investments Corp (MPIC), an affiliate of the PLDT group.
The deal gives PLDT a direct stake of 41.4 percent in Meralco and with First Holdings voting with the group, it will effective controls 48 percent of the power retailer.
The Lopez clan said for now it would hold on to the remainder of its shares in Meralco, which are equivalent to one board seat.
San Miguel has said it and its allies own about 43 percent of the utility.
'Metro Pacific Investments Corp exercised its right of first refusal and matched the Triratna offer for a Meralco valuation of 300 pesos per share,' a statement from First Holdings said.
Triratna is an investment company headed by the son of the country's leading tycoon Henry Sy. On Friday, it made a surprise offer to purchase First Holdings' entire 13.4 percent stake in Manila Electric for $940 million.
Sy, a business ally of the San Miguel president, had offered 300 pesos per Meralco share, forcing Metro Pacific, already in the midst of talks with First Holdings, to match the offer.
Meralco owns the country's largest power franchise and has become an attractive target after regulators allowed it to raise power tariffs by up to 27 percent, its first hike since 2003.
'It reflects a valuation that shows the strong growth prospects of Meralco,' First Holdings Chairman Oscar Lopez said in a statement about the deal.
'The proceeds no doubt will allow First Holdings to pursue its new directions and further establish itself in the country as the premier renewable energy provider.'
Under the deal, Metro Pacific will have a call option on First Holdings' 6.7 percent Meralco stake exercisable until March 31, 2010. Metro Pacific will also provide a short term loan of about 11.2 billion pesos to First Holdings, with 5 percent interest per annum.
Evercore Partners was First Holdings' adviser to the deal.
The Lopez group initially sold a 20 percent stake in Manila Electric to the PLDT group in March for $414 million.
Manila Electric shares closed up 1.8 percent at 221 pesos on Thursday, while First Philippine Holdings jumped 6.4 percent, outpacing the overall market's 1.27 percent rise.
Both stocks are among the strongest, and most volatile, performers on the stock market this year, with Manila Electric surging nearly 265 percent and First Holdings galloping 257 percent.
(Reporting by Rosemarie Francisco) ((rosemarie.francisco@thomsonreuters.com; +63 2 841-8937; Reuters Messaging: rosemarie.francisco.reuters.com@reuters.net)) Keywords: MERALCO/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
MANILA, Nov 5 (Reuters) - The PLDT group forged a $471 million deal on Thursday for a 6.7 percent stake in Manila Electric Co (Meralco), edging out rival San Miguel Corp and cementing its control over the utility.
First Philippine Holdings, the holding firm of the Lopez business clan, said it had agreed to sell 6.7 percent -- half of its holdings -- in Meralco to Metro Pacific Investments Corp (MPIC), an affiliate of the PLDT group.
The deal gives PLDT a direct stake of 41.4 percent in Meralco and with First Holdings voting with the group, it will effective controls 48 percent of the power retailer.
The Lopez clan said for now it would hold on to the remainder of its shares in Meralco, which are equivalent to one board seat.
San Miguel has said it and its allies own about 43 percent of the utility.
'Metro Pacific Investments Corp exercised its right of first refusal and matched the Triratna offer for a Meralco valuation of 300 pesos per share,' a statement from First Holdings said.
Triratna is an investment company headed by the son of the country's leading tycoon Henry Sy. On Friday, it made a surprise offer to purchase First Holdings' entire 13.4 percent stake in Manila Electric for $940 million.
Sy, a business ally of the San Miguel president, had offered 300 pesos per Meralco share, forcing Metro Pacific, already in the midst of talks with First Holdings, to match the offer.
Meralco owns the country's largest power franchise and has become an attractive target after regulators allowed it to raise power tariffs by up to 27 percent, its first hike since 2003.
'It reflects a valuation that shows the strong growth prospects of Meralco,' First Holdings Chairman Oscar Lopez said in a statement about the deal.
'The proceeds no doubt will allow First Holdings to pursue its new directions and further establish itself in the country as the premier renewable energy provider.'
Under the deal, Metro Pacific will have a call option on First Holdings' 6.7 percent Meralco stake exercisable until March 31, 2010. Metro Pacific will also provide a short term loan of about 11.2 billion pesos to First Holdings, with 5 percent interest per annum.
Evercore Partners was First Holdings' adviser to the deal.
The Lopez group initially sold a 20 percent stake in Manila Electric to the PLDT group in March for $414 million.
Manila Electric shares closed up 1.8 percent at 221 pesos on Thursday, while First Philippine Holdings jumped 6.4 percent, outpacing the overall market's 1.27 percent rise.
Both stocks are among the strongest, and most volatile, performers on the stock market this year, with Manila Electric surging nearly 265 percent and First Holdings galloping 257 percent.
(Reporting by Rosemarie Francisco) ((rosemarie.francisco@thomsonreuters.com; +63 2 841-8937; Reuters Messaging: rosemarie.francisco.reuters.com@reuters.net)) Keywords: MERALCO/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.