MANILA - The Philippines' securities and corporate regulators said on Tuesday they will begin a review of a $471 million deal by Metro Pacific Investments Corp. (MPIC) to raise its stake in Manila Electric Co. (Meralco), to examine if an open offer is required.

Minority shareholders of Meralco, led by state pension fund Government Service Insurance System (GSIS), have said MPIC and its sister firm Pilipino Telephone Corp. of the PLDT group, should make an offer to buy out other shareholders.

This came after MPIC obtained a call option to acquire 6.7% of the Lopez family's remaining 13.4% stake in Meralco, raising the PLDT group's combined stake in the country's largest utility beyond 35%, the trigger for a tender offer.

MPIC, led by businessman Manuel V. Pangilinan, has previously said that the latest deal with the Lopez clan does not warrant a tender offer since the securities law exempts open market purchases from this rule. The company said 14.7% of the PLDT group's total 34.7% interest in the power firm was acquired through open market purchases.

"We have to check all the documents and disclosures, gather all the documents," Juanita Cueto, commissioner at the Securities and Exchange Commission (SEC), told reporters in reply to a question on whether PLDT group needs to make an open offer.

"You have to look at the intent, the purpose, if there's only one party, if it's a group," Cueto said.

The Philippine Stock Exchange (PSE), for its part, will also ask MPIC and First Philippine Holdings Corp., the Lopez firm holding Meralco, to submit pertinent documents relating to their agreement.

PSE director Vivian Yuchengco shared her personal view that the transaction entails a tender offer.

She noted that the agreement between the two parties seems to have been structured in a way that MPIC will be able to avoid conducting a costly buyout of other shareholders.

Trading in MPIC, a unit of Hong Kong's First Pacific Co. Ltd., and Meralco has been volatile after the deal was struck on November 5. With a report from Reuters