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Manila Water Fails to Win Approval for PAM Lyonnaise Acquisition

Manila Water Co., the utility serving half the Philippine capital, failed to win approval for its proposed purchase of a 51 percent stake in PT PAM Lyonnaise Jaya, setting back plans for growth in Indonesia.

PAM Jaya, a state-owned company, rejected the plan, Manila Water said in a statement, having previously agreed to buy stock held by France’s Suez Environnement. PAM Lyonnaise supplies water to western Jakarta under a 25-year accord with PAM Jaya.

The collapse of the deal, agreed to in October, means Manila Water will have to look elsewhere for expansion in Indonesia, south of the Philippines. While the utility didn’t specify why the planned purchase failed to win approval, the Jakarta Post said last month that Jakarta City was seeking to acquire a majority stake in PAM Lyonnaise.

“The deal could have potentially contributed 20 percent to 30 percent of Manila Water’s revenue,” said Kervin Sisayan, an analyst at COL Financial Group Inc. in Manila. “It doesn’t change how we view Manila Water’s fair value, especially since we don’t know how much it was going to pay for the stake.”

PAM Lyonnaise, which has served western Jakarta since 1997 under its agreement with PAM Jaya, supplies 700 million liters (185 million gallons) of water a day through 5,300 kilometers (3,300 miles) of pipes, according to Manila Water.

Manila Water shares fell 0.5 percent to 31.85 pesos today, trimming gains over the past year to 26 percent.

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