First Pacific strengthens control of Meralco
Hong Kong’s First Pacific Co. has strengthened its hold on the Philippines’ largest power retailer, with its top executive set to take over the reins of Manila Electric Co (Meralco) in July.
The move signals a cooling of the battle for control of Meralco between First Pacific and food-to-energy conglomerate San Miguel Corp. , which drove Meralco’s shares to a record high of 302.50 pesos ($6.4) last July.
Meralco said Manuel Pangilinan, managing director and chief executive of First Pacific, will become chief executive on July 1.
Through its units, First Pacific effectively controls more than 40% of Meralco, while San Miguel holds 27%.
Most of First Pacific’s stake was built up by purchasing some of the holdings of the Lopez family, who have managed Meralco since 1986.
Current CEO Manolo Lopez will remain as chairman.
“The transition, considering that this is a legacy asset, should be done very properly,” Pangilinan told reporters when asked why he was assuming the chief executive position.
“On the whole, this kind of transition should be from one owner to the other.”
Pangilinan, a 63-year-old bachelor and Wharton graduate who has steered First Pacific for more than two decades, will head Meralco as it diversifies into areas such as power generation.
When asked if the group wants to acquire a majority stake in Meralco, Pangilinan said: “We’re always open.”
‘Good investment’
San Miguel president Ramon Ang, who is also vice-chairman of Meralco, said the food-to-power conglomerate would maintain its 27% stake in Meralco, despite a group policy of aiming for control in any venture.
“I think it is a good investment. I think we will hold this investment,” Ang told reporters. Later, he said San Miguel may increase its stake “if there is a good opportunity.”
On Tuesday, shares in Meralco ended down 0.6 percent at 168 pesos in a market <.PSI> that fell 2.8% to a two-month closing low.
First Pacific has built up its stake through its Philippine flagship Metro Pacific Investments Corp. and subsidiaries and related firms such as Philippine Long Distance Telephone Co (PLDT).
Pangilinan is chairman of Metro Pacific, PLDT and its Pilipino Telephone Corp.unit. He also chairs Beacon Electric Asset Holding, which was created this year by Metro Pacific and Piltel and holds most of the stake in Meralco.
Pangilinan said it was unlikely Meralco would match its 2009 performance, when its net income more than doubled to P6 billion, because of a delay in a power rate hike. The first tariff rate adjustment in nearly six years had lifted profit in 2009.
In contrast, analysts expect Meralco’s 2010 net income to reach 13.2 billion pesos, according to consensus forecasts by Thomson Reuters.
Meralco expects this year’s core net profit, which takes out currency and derivatives gains, to reach P11 billion, up 57% from P7 billion last year. ABS-CBN News
