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GSIS sells Meralco stake to San Miguel

27% holding priced at P90/share

By Michelle Remo, Elizabeth Sanchez-Lacson
Philippine Daily Inquirer
First Posted 02:18:00 10/28/2008

Filed Under: Oil & Gas - Downstream activities, Electricity Production & Distribution, Company Information, Investments, Stock Activity

The state-run pension fund Government Service Insurance System (GSIS), which has been in a well-publicized boardroom dispute at power retailer Manila Electric Co. (Meralco), is selling its 27-percent shareholding in Meralco to the beverage and good conglomerate San Miguel Corp. for P90 a share?more than double the Meralco closing price of P44.50 on Monday.

San Miguel has gotten board consent for management to enter into a sale and purchase agreement with the GSIS on the latter?s shares in Meralco, San Miguel chief financial officer Ferdinand Constantino said in a disclosure to the Philippine Stock Exchange.

As of June, San Miguel had cash assets of P105 billion.

San Miguel said the acquisition price would be paid over three years.

GSIS president Winston Garcia said the deal was worth P30 billion, including interest over the three-year period.

San Miguel said it was also pursuing two other, potential large-scale investments in power and mining in the Philippines and Indonesia.

It said the board also authorized San Miguel management to initiate talks with London-based fund Ashmore Group on a stake in oil refiner and retailer Petron Corp.

Ashmore owns 50.57 percent of Petron and has decided to exercise its right of first refusal to buy the government?s remaining 40-percent stake, sources said.

Sources said Ashmore was considering selling only a portion of its Petron stake to San Miguel.

San Miguel plans to enter into talks with Indonesia?s PT Bakrie and Brothers for an alliance on operations of coal mining firm PT Bumi Resources.

PT Bumi Resources is an Indonesian-based natural resource company engaged in mining, oil, gas and energy-related activities. Through various subsidiaries, it owns the world?s biggest export coal mine and has operations in East and South Kalimantan with 11 billion tons of minable coal reserves, about 55 million tons in average sales volumes over the last three years, and a steady cash flow.

San Miguel last year announced plans to go into high-growth industries, including mining, like power generation and transmission, infrastructure, water distribution and other utilities, and property development, and obtained stockholder approval on these new directions.

San Miguel previously announced plans to invest about $750 million in new businesses. Edited by INQUIRER.net



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