San Miguel Raises $400 Million Selling Manila Electric Stake

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

San Miguel sold 64.3 million shares at 270 pesos apiece, it said today in a stock exchange filing. The sale of about 5.7 percent of Manila Electric 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 plunged 8.2 percent to 277.60 pesos at the close in Manila, the sharpest decline since Jan. 22, 2010. San Miguel fell 0.3 percent to 87.50 pesos, paring an earlier decline of as much as 4.4 percent. The benchmark Philippine Stock Index dropped 0.4 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.”

Stake Buyers

Metro Pacific Investments Corp., the Philippine unit of billionaire Anthoni Salim’s First Pacific Co., bought 10 million Manila Electric shares, its spokeswoman Melody del Rosario said. The Philippine government-owned pension fund also purchased some of the shares, spokeswoman Marge Jorillo said in a mobile-phone text reply.

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 First Pacific, posted a 19 percent gain in first-quarter profit to 4 billion pesos.

The sale cuts San Miguel’s holding in Meralco to about 27 percent. 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.

San Miguel may invest as much as $6 billion to build coal-fired power plants with a capacity of 3,000 megawatts, the company said today in a stock exchange filing.

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