SMC likely to hike stake in Meralco

San Miguel Corp. (SMC), the country’s largest food and beverage conglomerate, is likely to increase its stake in Manila Electric Co. (Meralco) following the sale of government financial institutions (GFIs) of their 10-percent stake in the power firm, analysts said.

Analysts said that SMC, which bought the 27 percent stake of Government Service Insurance System (GSIS) in Meralco, would want to acquire more shares in the power distributor.

“Knowing SMC, they would want full control,” said Joseph Roxas, president of Eagle Equities Inc.

Another analyst shared the same view, saying that the track record of SMC is “to go full blast.”

Government financial institutions such as the Landbank of the Philippines, Social Security System (SSS) and the Development Bank of the Philippines (DBP) have agreed to sell their stakes in combined 10- percent stake in Meralco at roughly P90 per share or equal to the price that GSIS got when it sold its 27-percent stake in the power firm.

Last October, GSIS sold its remaining 27-percent stake in Meralco to SMC. GSIS is expected to raise P30 billion from the transaction.

The GFIs sold their stake to Global 5000, an investment firm associated with the Ayalas and former trade minister Roberto Ongpin, a government source said.

Government sources familiar with the transaction said that SMC is seen “to work together” with Global 5000.

“It’s very likely that they could join forces,” a government source said.

Another analyst said that the Lopez group, which currently runs Meralco, may decide to cash in on their stake and sell it to SMC if they get a good offer. Representatives of the GFIs said the presence of SMC in Meralco would enhance the company’s share value which could benefit the public.

Based on the sale agreement signed between Global 5000 and the three GFIs, the final transfer of shares of Meralco will not take place until full payment has been made. However, the buyer will already have voting rights

Global 5000 has agreed to pay the three GFIs in four installments — 20 percent before the end of December and the rest from 2010 to 2012.

“It would be interest-bearing, with the rate better than market rates. The interest rate per annum is seven percent,” a government source said.

Another government source said GFIs got a good deal because they have been selling their shares for quite some time already. “Nobody wanted to buy before. Now, we got a good offer so we decided to sell,” said the source.