Gokongwei buys 27% of Meralco

JG Summit completes purchase of P72-B Meralco shares held by San Miguel

MANILA, Philippines - JG Summit Holdings Inc., the investment vehicle of tycoon John Gokongwei Jr., is now officially a minority shareholder of power distribution giant Manila Electric Co. (Meralco).

In a regulatory filing, JG Summit said it “successfully completed the acquisition of 305.68 million common shares of Meralco from San Miguel Corp., San Miguel Pure Foods Co. Inc. and SMC Global Power Holdings Corp.”

The deal was consummated through a special block sale yesterday, allowing diversified conglomerate SMC to substantially pare down its stake in the power distributor that is controlled by the Pangilinan Group.

Late in September, the Gokongwei family’s listed holding firm struck a deal to buy a 27-percent stake in Meralco for P72 billion from SMC, which is focusing on various investment opportunities like infrastructure projects and oil and gas acquisitions.

To fund the acquisition, JG Summit raised P8.8 billion through an overnight share sale and P12 billion by unloading a portion of its stake in snack  food unit Universal Robina Corp. The company is planning to generate as much as P30 billion from the bond market.

The Meralco acquisition allowed JG Summit to partner anew with the group of businessman Manuel V. Pangilinan. In 2011, telecommunications giant Philippine Long Distance Telephone Co. acquired Sun Cellular operator Digital Telecommunications Philippines Inc. of the Gokongwei family through a P69.2-billion share -swap deal.

JG Summit is also venturing into infrastructure projects as it formed a joint venture firm with Pangilinan-led Metro Pacific Investments Corp. to bid for the expansion and operation of the P17.5-billion Mactan Cebu International Airport project.

In the nine months to September this year, profits of JG Summit slipped 21.8 percent to P8.41 billion from P10.76 billion a year ago due to the depreciation of the peso against the dollar.

For its part, SMC is no longer a significant minority shareholder in Meralco. In October 2008, SMC bought the Government Service Insurance System’s 300.963 million Meralco common shares at P90 apiece.

From its core brewery and food business, SMC has expanded into power production (SMC Global Power Holdings Corp.), downstream oil sector (Petron Corp.), packaging (San Miguel Yamamura Packaging Corp.), airline (Philippine Airlines) and several infrastructure projects like the Caticlan airport and Skyway.