First Pacific cements control of Meralco

MANILA, Philippines—The First Pacific group cemented its majority control of power distributor Manila Electric Co. by acquiring an additional 2.66 percent stake in the company from the Lopez group for P8.85 billion.

Local holding firm Beacon Asset Holdings struck a deal to buy 30 million additional common shares in Meralco at a cash price of P295 per share, or close to record high prices, thus raising its stake in the utility to 48.02 percent. The transaction is expected to be completed on February 1.

Beacon is a 50-50 percent joint venture between First Pacific-led units Metro Pacific Investments Corp. and PLDT Communications and Energy Ventures Inc. (PCEV), formerly known as Pilipino Telephone Corp. PCEV owns another 6.1 percent direct stake in Meralco aside from the indirect interest through Beacon, giving the First Pacific group led by businessman Manuel V. Pangilinan majority control of the power distributor.

The two companies told the Philippine Stock Exchange that this acquisition represented “an opportunity to further consolidate Beacon’s investment in a sector that the Beacon group believes will have significant growth as the Philippine economy grows.”

“Meralco is now focused on growing its current business and in investing in new areas such as power generation, aimed at enhancing shareholder value and providing efficient and upgraded services for the public,” the joint disclosure said.

Beacon’s funding for this acquisition, like other recent purchases of shares in Meralco, will be provided via an equity injection of P5.4 billion to which MPIC and PCEV will subscribe equally and a P5 billion corporate notes facility arranged for Beacon by First Metro Investment Corp. and PNB Capital and Investment Corp.

After the completion of the transaction, the Lopez group, through First Philippine Holdings together with subsidiary First Philippines Utilities Corp., will continue to own about 3.9 percent of Meralco. The Lopezes, under certain conditions, will also retain a board seat in Meralco under certain circumstances after completion of the sale.