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San Miguel Raises $400 Million Selling Manila Electric Stake

San Miguel Corp. (SMC), the largest Philippine company, raised $400 million selling a part of its stake in Manila Electric Co. (MER) at a discount to fund an expansion beyond beer and food. The shares of both companies fell.

San Miguel sold 64.3 million shares, or 5.7 percent, at 270 pesos apiece, it said today in a stock exchange filing, without identifying the buyer. The sale exceeded the planned offer of as many as 48 million shares and was priced at the bottom of a 270 peso to 280 peso range, according to the terms obtained by Bloomberg News yesterday.

Selling a portion of its 32.8 percent stake in the country’s biggest power retailer will help San Miguel’s foray into airlines, energy and infrastructure. The company that started making beer before the country declared independence from Spain more than 100 years ago plans to raise about $4 billion selling power assets to fund the expansion, San Miguel President Ramon Ang said on July 12.

Manila Electric dropped as much as 9.1 percent to 275 pesos as of 11:30 a.m. in Manila, poised for the sharpest drop since Nov. 6, 2009. San Miguel fell as much as 4.4 percent. The benchmark Philippine Stock Index fell 0.6 percent.

“It’s simply reflecting the discounted price,” Alex Pomento, a Manila-based strategist at Macquarie Group Ltd., said of Manila Electric’s price drop. “There’s nothing wrong with the fundamentals of the company.”

Manila Electric, also known as Meralco, serves a quarter of the nation’s population in an area that accounts for half of gross domestic product. The company, 48.3 percent owned by units of billionaire Anthoni Salim’s First Pacific Co., posted a 19 percent gain in first-quarter profit to 4 billion pesos.

San Miguel and its units had acquired most of their holding in Meralco at 90 pesos each in 2008.

The company plans to sell its Meralco shares in phases and 49 percent of unit SMC Global Power Holdings Corp., Ang said on July 12. SMC Global Power is the country’s biggest electricity generator with assets accounting for a fifth of the nation’s capacity. The generation unit’s equity value is at least $1.6 billion, Ang said.

To contact the reporter on this story: Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editors responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net

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