Bourse asks Meralco to explain share price surge

MANILA, Philippines - Manila Electric Co. (Meralco), the country’s largest power distributor, has been asked anew to explain a share price surge as market talk continued that the Lopez family was headed for a battle for control with new partner San Miguel Corp. Friday’s price gain — a 12.5 percent rise to P126 — came on the last day that voting power, based on accumulated shares, would be set ahead of the Meralco’s annual stockholders’ meeting in May. In a memorandum, the Philippine Stock Exchange asked Meralco to explain price movements for the past 20 days. Meralco, which last month was asked the same question, again said it knew of no reason for the surge. Friday’s closing of P126 — the stock even hit a high of P129 during the day — was the highest since power firm listed in 1992. Shares of the company accounted for 57 percent of total transactions, contributing P2.15 billion to the market’s P3.74-billion total turnover. This week alone Meralco shares have climbed by almost half; the firm has more than doubled its share price since opening the year at P59.50. Market talk pointed to a battle for control between the Lopezes and Cojuangco-led San Miguel, which is diversifying out of its core food and beverage business and last year bought the Government Service Insurance System’s 27 percent stake in Meralco for P27 billion. Another 10 percent owned by other government finance institutions was bought by Global 5000 Investment, described as an ally of San Miguel. The Lopezes, who own 33 percent of Meralco, are said to have found their own confederate in Philippine Long Distance Telephone Co. chairman Manuel V. Pangilinan, who reportedly has also been buying up the power distributor’s shares. The Lopezes, San Miguel, and Mr. Pangilinan declined to comment. Meralco executives have said they did not see a battle for control with San Miguel, which has also declared that it was content with its 27 percent stake. An analyst who requested anonymity claimed that San Miguel President and COO Ramon S. Ang was in the market yesterday following reports that Mr. Pangilinan had thrown his hat into the ring. “The speculation right now is that Mr. Ang was buying in his own capacity on behalf of the San Miguel group," the analyst said, adding that the Lopezes and Mr. Pangilinan had mustered a 37 percent stake in Meralco. “San Miguel and ally Global 5000 Investment, Inc. already has a combined stake of 37 percent, that is why Mr. Ang bought shares from the market yesterday," the analyst claimed. Some 5.8 million shares worth P728 million were crossed yesterday by foreign brokerage CLSA Philippines, Inc., he added. With Friday being the last day for accumulated shares to be counted for May’s stockholders’ meeting, Meralco’s price will likely go down next week, the analyst said. - BusinessWorld