MANILA - Diversified conglomerate San Miguel Corp. (SMC) may have the financial muscle to acquire the Lopez family's remaining stake in Manila Electric Co. (Meralco) at the "best" price but it will face serious competition from the Philippine Long Distance Telephone Co. (PLDT) group, which will be prioritized in any sale.

In an interview with reporters, PLDT Chairman Manuel V. Pangilinan reiterated that they have the right of first refusal over the Lopezes' 13.4% Meralco stake before this could be offered to a third party.

Pangilinan was reacting to the disclosure of SMC that it will partner with a Japanese firm to buy the stake that could be worth as much as P40 billion.

"Every party has the right to offer the Lopezes, who in turn, have the right to receive the offer. But we have the right of first refusal on the (Lopezes') shares, it is a passive right until an offer is made," said Pangilinan.

The right of first refusal is a contractual right of a person or company to purchase something before the offering is made available to others.

SMC President Ramon Ang earlier said that they are interested to acquire the Lopez family's Meralco stake to gain majority control of the power distributor even if this entails a tender offer.

Asked whether PLDT will be willing to match any offer by SMC, Pangilinan replied, "We will deal with it when it happens."

Pangilinan emphasized that they intend to keep Meralco for the long term.

No proposal

Meanwhile, Benjamin Lopez, the son of Lopez clan patriarch Oscar Lopez and vice president of First Philippine Holdings Corp. (FPHC), said in a phone interview that as of the moment, no party has approached them for a possible deal involving their Meralco holdings.

"We haven't received any proposal yet. But if there is a proposal, we have to present it to the board, and PLDT will be the first one to know, of course," he noted.

Meralco has become an attractive target for both SMC and PLDT as both firms can piggyback on its network of electricity poles to offer telecommunications services.

The PLDT group said it controls about 48% of the power utility, together with some business partners and the remaining stake held by the Lopezes through FPHC.

SMC currently has a direct 27% stake in Meralco which it bought for over $600 million last year. The company claims to control a total of about 43% of Meralco along with allies.

Soaring Meralco stock

The perceived continued battle for control of the power utility has pushed it share prices to record-highs in the previous months.

On Monday, shares of Meralco rose 11.7% to P262.50--below its peak of P302.50 but much higher than the Lopez family's earlier selling price of P90 per share--prompting analysts to say that the stock is "very expensive."

"From a fundamental point of view, it is expensive. If I were the investor, I'd be cautious because there are other issues there with much better valuations," said PCCI President Francisco Liboro.

"The idea that there is a continuing bidding war for Meralco may continue to sustain the interest of investors in the stock and push its share price, but a correction is on the way. Meralco is already overbought," he added.

Both A and B shares of SMC were unchanged at P65 and P65.50, respectively, while PLDT added 1.4% at P2,480. - with Reuters