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JG Summit Holdings to buy stake in Manila Electric

Staff writer |
JG Summit Holdings of Philippines will pay $1.65 billion for San Miguel Corp's stake in Manila Electric (Meralco), the country's biggest M&A deal in nearly two years.

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The acquisition is yet another sign of Philippine holding diversifying away from their traditional businesses. JG Summit is entering electricity distribution to benefit from an expected rise in power demand as the Philippine economy expands.

JG Summit, whose businesses include food, airlines, petrochemicals, property and banking, said in a statement that it will acquire a 27.1 percent stake in the Philippines' largest power utility via a debt and equity deal. The stake is equivalent to around 305 million shares valued at about 236 pesos apiece, based on Reuters calculations.

The deal marks a discount of around 20 percent to current market prices, and is also 13 percent cheaper than the July share sale in which San Miguel sold a 5.7 percent stake in Meralco to investors that included the Metro Pacific group.

The M&A deal is the biggest involving a Philippine firm since October 2011 when JG Summit sold its telecoms arm Digital Telecommunications in a $2 billion share-swap deal with Philippine Long Distance Telephone.

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