(UPDATE) San Miguel buys GSIS' Meralco stake for P26B
By LIZA REYES/ ABS-CBN News | 10/27/2008 5:42 PM
Printer-friendly version | 
Send to friend | 
Share your views
In a surprise move late Monday, state pension fund the Government Service Insurance System (GSIS) has agreed to sell its entire 27 percent stake in the Manila Electric Co. (Meralco) at P90 per share or a total of P26 billion (excluding interest).
The sale represents a 102 percent premium over Meralco's closing price Monday.
In a disclosure to the stock exchange, San Miguel Corporation (SMC) said it has agreed to acquire the GSIS stake in Meralco to be payable in three years.
"It's a very good price, it represents over 100 percent premium (over market price). This is the highest amount you can get during the lowest point of the stock market," Winston Garcia said in a phone interview with ABS-CBN.
On Monday, Meralco's share price closed at P44.50 a piece.
Asked why the hasty disposal of its shares in MERALCO, Garcia said: "We received a very attractive offer and it is my mandate to ensure that government funds are earning despite the weak market. We are happy to pull this one out."
Garcia added GSIS will earn roughly P12 billion from the sale.
"That's very surprising. Why would a company buy Meralco or listed stock for that matter at a hundred two percent premium, in a down market and its the worst trading day of the year? For the seller, its great but for the buyer it's really strange," Francisco Liboro of PCCI Securities said.
Liboro added, it would be interesting how San Miguel will be able to justify this purchase to its shareholders, given the price.
"Fundamentally though, I think Meralco's a good buy. There's nothing wrong with Meralco, and it is a good company to invest for the long term.
SMC also eyeing Petron
Apart from Meralco, San Miguel said it is also in talks with the Ashmore Group for a possible stake in the Philippines' largest oil refiner, Petron and with Indonesia's PT Bakrie and Bros. for an alliance with PT Bumi Resources.
PT Bumi Resources Tbk is an Indonesian-based firm engaged in mining, oil, gas and energy-related activities.
San Miguel has been wanting to enter into power and energy related sectors since last year after its failed bid for the National Transmission Corp. (TRANSCO) and PNOC-EDC.
abs-cbnNEWS.com is the online news department of ABS-CBN Interactive Inc., a subsidiary of ABS-CBN Broadcasting Corp. ABS-CBN and Meralco are both part of the Lopez Group of Companies.
