Meralco stocks surge 40% in 2 weeks

MANILA, Philippines - Persistent rumors of a tug-of-war over control of Manila Electric Co. (Meralco) sent the power giant’s share prices to new highs in just two weeks, soaring by nearly 40 percent to P83 yesterday from only P52.50 in Jan. 30.

Share prices of Meralco have been steadily appreciating since Jan. 30 on talks that its two major shareholders – the Lopez Group and Southeast Asia’s biggest food and drink group San Miguel Corp. – are gearing up for a proxy war in preparation for the utility firm’s annual stockholders meeting this year.

Meralco’s closing price   was slighly up its 52-week high of P82.50 and 6.4 percent higher than Wednesday’s close of P78. A total of 21.4 million shares were traded worth P1.75 billion, a significant 57 percent of yesterday’s total market volume worth P3.081 billion.

Of the total Meralco transactions, P1.33 billion worth of shares were crossed at the stock exchange at different prices yesterday.

Interest in the rumor was keen for the reason that the Lopez family has run Meralco for decades. 

In a letter to the Philippine Stock Exchange (PSE), Meralco first vice president and treasurer Rafael Andrada said the company is not aware of any particular reason for the run-up in the price of the firm’s shares and neither does it have immediate information as to who are the persons or entities purchasing or investing in Meralco shares.

The letter was in response to PSE’s directive requiring it to explain the steady rise in the share prices of Meralco.

“Obviously there’s something going on. We don’t know what exactly is going to happen next. Some people are probably hoarding because theyre thinking that there could be another proxy war that could erupt involving Meralco shares,” said Jun Calaycay of Accord Capital Equities Inc.

In a text message to The STAR, San Miguel president Ramon S. Ang said San Miguel is pleased with its investment in Meralco given the shares continued appreciation over the past several days. “SMC is happy with its investment. Share prices are now much higher when we joined the Meralco board,” Ang said.

Ang, however, was quick to point out that San Miguel will not take over Meralco as it fully supports the Lopez family. “San Miguel is not taking over Meralco. (It is) supporting the Lopez (Group),” Ang said.

Late last month, San Miguel obtained four seats on the 11-member Meralco board and installed its president Ramon Ang, chairman Eduardo Cojuangco, director Estelito Mendoza and financial consultant Aurora Calderon as directors. 

San Miguel acquired a 27-percent voting block in Meralco via a staggered payment scheme with the GSIS in October 2008.

Global 5000, a local fund believed to be affiliated with San Miguel, acquired last month a seven percent interest in Meralco from state pension fund Social Security System and state-owned Development Bank of the Philippines.