Meralco sees harmony among its shareholders

Business Mirror

Posted at Feb 27 2009 10:55 AM | Updated as of Feb 27 2009 06:55 PM

Manila Electric Co. (Meralco) is unlikely to witness another battle for control, its president said yesterday, despite talk new shareholder San Miguel Corp. is looking to take charge as it moves out of its core food and drinks business.

The Lopez clan remains in control of Meralco, the Philippines’ biggest power distributor, after defeating an attempt by a state pension fund last year to shake up management in an ugly row over electricity rates.

San Miguel, Southeast Asia’s largest food and drinks group, agreed in October to acquire the Government Service Insurance Fund’s 27% stake in Meralco, valued at more than $600 million. And so far, San Miguel has been supportive of management.

"It’s been a harmonious relationship, quite productive," Meralco’s newly-appointed president, Jose de Jesus, said in an interview.

"The two groups are, I think, expected to work quite harmoniously so I don’t expect to see a real battle for control."

The Lopez family owns just over 33% of Meralco through First Philippine Holdings .

The clan is one of the most powerful dynasties in the country with interests in power generation, toll roads, property development and owns the country’s biggest media firm, ABS-CBN Broadcasting Corp.

Shares of Meralco last week surged to their highest a year and a half, bucking the weak market, as talk persisted that the Lopezes and San
Miguel were racing to take a dominant stake in the power firm.

San Miguel last week announced it was selling a 43.3% stake in its crown jewel, San Miguel Brewery , to Japan’s No. 2 brewer, Kirin Holdings, a move which analysts say was a strong signal the company was intent on moving out of its core business.

And analysts say San Miguel could be targetting Meralco as its next flagship with the administration of Philippine President Gloria Macapagal Arroyo seen backing the plan to oust the Lopezes, who are seen as critical of the government.

Mrs. Arroyo visited San Miguel’s headquarters last week, and company president Ramon Ang promised the Philippine leader he would push for Meralco to lower rates, the same campaign waged by state-run GSIS last year.

Mr. Ang is also vice-chairman at Meralco.

Mr. De Jesus took the top job at Meralco earlier this month.

"Undoubtedly, it’s a very exciting job for me," he said when asked about the crucial juncture the firm was at. "I think it’s the biggest challenge in my professional career and I’ll give it my best shot." —Reuters