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Ramon Ang's San Miguel Global Power buys P3.9 billion worth of shares held by Land Bank in Meralco after courts clear the transaction
MANILA, Philippines – Billionaire Ramon Ang’s diversified conglomerate San Miguel Corporation (SMC) confirmed that one of its subsidiaries bought a small stake in the Philippines’ largest power distributor Manila Electric Company (Meralco) on Wednesday, July 23.
In a disclosure to the Philippine Stock Exchange (PSE), SMC said that its wholly owned subsidiary, San Miguel Global Power Holdings Corporation (SM Global Power), purchased 43.2 million common shares of Meralco held by the Land Bank of the Philippines (LBP) at P90 each or roughly P3.9 billion, equivalent to a 3.8% stake in the Philippines’ largest power distributor.
“Such shares were transacted in the Philippine Stock Exchange this morning thru the Deed of Absolute Sale which contained the terms and conditions mutually determined by and acceptable to both parties and conformably with the decision of the Court of Appeals, subject of the disclosure to the Exchange by the Corporation, dated November 14, 2022,” SMC corporate information officer Ferdinand Constantino said. “Ownership of the shares shall be held by SM Global Power.”
Ang is president and CEO of SM Global Power while tycoon Manuel Pangilinan is CEO of Meralco. Meralco’s principal and substantial stockholders are Beacon Electric Asset Holdings Incorporated (around 35%); the Gokongweis’ JG Summit Holdings (around 30%); Pangilinan’s Metro Pacific Investments Corporation (10%). The remaining 25% are held by other investors and company employees.
The sale of LBP’s shares in Meralco to SM Global Power, formerly called Global Power Investment Incorporated (Global 5000), had been stuck in litigation for over a decade.
In November 2008, two LBP officials proposed the sale of the state-owned bank’s 4% stake in Meralco via a block sale of 46.59 million shares at P90 per share for P4.19 billion. The LBP board then approved the proposal and authorized then-LBP president and CEO Gilda Pico to negotiate the contract.
A month later, Pico signed a Share Purchase Agreement (SPA) with Global 5000.
In November 2014, however, the Omudsman filed a complaint against Pico and several other LBP officers and Global 5000 board of directors for violation of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act.
The Ombudsman claimed that the LBP officials “gave unwarranted benefits” to Global 5000 since the SPA did not undergo public bidding. It also argued that Global 5000 was then undercapitalized and did not yet have a track record since it had only been in existence for 10 months.
On April 26, 2023, the Supreme Court’s 2nd Division said that contrary to the findings of the Ombudsman, the LBP officials “conducted their own due diligence before proceeding with the transaction.”
The SC also said “there was no malice involved in the execution of the SPA,” and “no extraneous evidence” to support the allegation that the SPA was adopted to favor Global 5000.
“It is evident that petitioners exercised due diligence. They negotiated the terms of the Share Purchase Agreement in the exercise of sound business judgment and for the benefit of Land Bank,” said Senior Associate Justice Marvic Leonen in his decision on the petition for certiorari filed by LBP officials. Four other justices of the 2nd Division concurred.
Invoking the SC decision, the anti-graft court Sandiganbayan, in a June 14, 2024 resolution, dismissed the graft case against Pico and Carel Halog, a former LBP vice president. (READ: Sandiganbayan dismisses P4.2-B graft case vs former Landbank executives)
The Sandiganbayan said the SC ruling that reversed the Ombudsman’s findings and set aside the indictment was already final.
In November 2022, the Court of Appeals had also sided with SM Global Power when it ruled that Land Bank was liable for damages to the power fim over the delayed implementation of the agreement to sell its Meralco shares.
These paved the way for SMC Global Power’s purchase of the LBP shares on Wednesday. SMC Global Power is the power generation arm of SMC. Founded in 2009, it is now one of the largest power firms in the Philippines. It operates coal, natural gas, hydroelectric, and battery storage systems.
Although Ang and Pangilinan are rivals in the PBA, they have become business associates in fields such as infrastructure, particularly their tollway businesses. They had begun exploratory talks to merge Metro Pacific Tollways Corporation (MPTC) and SMC Tollways Corporation but the plan was put in the back burner early this year.
MPTC is behind the North Luzon Expressway (NLEX), Subic-Clark-Tarlac Expressway, Manila-Cavite Expressway, Cavite-Laguna Expressway (CALAX), Cebu-Cordova Link Expressway, and the NLEX Connector.
SMC Tollways, on the other hand, manages Skyway, NAIA Expressway, South Luzon Expressway, STAR Tollway, the Tarlac-Pangasinan-La Union Expressway, and the Muntinlupa-Cavite Expressway. – Rappler.com
