Meralco unit to take full control of Global Business Power

A SUBSIDIARY of Manila Electric Co. (Meralco) will fully own one of the leading power producers outside Luzon after the latter’s two biggest stakeholders signed a deal to transfer their respective holdings for around P34.47 billion.

In a regulatory filing on Wednesday, Meralco said its unit Meralco PowerGen Corp. (MGen) signed agreements with Beacon Powergen Holdings, Inc. and JG Summit Holdings, Inc. for the transfer of their respective shareholdings in Global Business Power Corp. (GBP).

Beacon Powergen holds a 56% ownership interest in GBP, while JG Summit holds 30%. These will be acquired by MGen, which has an existing 14%, for P22.44 billion and P12.02 billion, respectively.

Meralco said the transfer is expected “to deliver scale and operational synergy” to both GBP and MGen “and further enable these companies to provide ample and reliable supply of power to distribution utilities, electric cooperatives, and other customers at competitive rates.”

JG Summit and Metro Pacific Investments Corp. (MPIC), the parent firm of Beacon Powergen, also made separate disclosures of the deal. They said the transaction is part of their decision to “consolidate their power sector investments into a single vehicle.”

The purchase price will be paid in installments, with 60% at closing, 20% after six months and the remaining 20% after 18 months. The transaction, subject to customary closing conditions as well as regulatory and third-party approvals, is expected to close within the first quarter next year.

Meralco President Ray C. Espinosa said that the acquisition would allow MGen to build its own generation portfolio, with at least 1 gigawatt of renewable energy capacity in five years.

GBP has power generation assets in the Visayas and Mindanao with a gross capacity of 1,091 megawatts.

Lance Y. Gokongwei, JG Summit president and chief executive officer, said in a statement: “We are happy with how GBP has performed since our investment in 2016. The challenge now is how to further grow the business and take it to the next level. I am confident that combining this under Meralco, where JG Summit is also a significant shareholder, is the best way to achieve synergies and create further value.”

MPIC and JG Summit hold a 45.46% and 29.56% interest in Meralco, respectively.

Jose Ma. K. Lim, MPIC president and chief executive officer, said that the combination of investments in MGen was “strategic” for the company.

“This combination is a strategic one for MPIC as it presents opportunities in terms of promoting scale and operational efficiency while, at the same time, streamlining capital for MPIC’s other growth areas,” Mr. Lim said.

On Wednesday, shares in Meralco inched up 0.21% to finish at P282.60 apiece. Shares in JG Summit shed 1.11% to end at P71.20 per piece. MPIC shares went up by 0.24% to P4.18 each.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Angelica Y. Yang