Manila Electric Co. said Monday the acquisition price of P34.466 billion that wholly-owned unit Meralco PowerGen Corp. paid for the 86-percent stake in Global Business Power Corp. is “fair and reasonable.”
Meralco said in a disclosure to the stock exchange Meralco PowerGen engaged the services of an independent third party to provide a fairness opinion on the terms of the transaction.
“Based on such independent review, the fairness opinion concluded that the price for the transaction is fair and reasonable from a financial standpoint,” Meralco said.
Meralco PowerGen signed agreements with Beacon Powergen Holding Inc., a wholly-owned subsidiary of Metro Pacific Investments Corp., and JG Summit Holdings Inc. last week to sell their respective shareholdings in GBP to Meralco PowerGen for P22.443 billion and P12.023 billion, respectively.
The purchase price would be paid in installments: 60 percent at closing, 20 percent six months after and 20 percent after 18 months.
“The amount was the result of the negotiations between the sellers and the buyer,” Meralco said.
It said the valuation of GBP considered the business activities of GBP and its subsidiaries, including long-term power supply agreements and retail electricity supply contracts, with the balance of the group’s capacity sold to the wholesale electricity spot market.
It also took note of GBP’s expansion plans, including the development of a robust pipeline of thermal and renewable energy projects. Meralco said the valuation was based on an extensive due diligence review of GBP and its subsidiaries businesses conducted by third-party consultants and advisors.
“With GBP’s operational experience of successfully running its own portfolio of generation assets, coupled with MGen’s own record of managing the first supercritical generation plant in the country, MGen will be better placed to focus on its plan to build its own generation portfolio, including an ambition to own at least 1 gigawatts in renewable energy capacity in five years,” Meralco president Ray Espinosa said earlier.
BEAHI held 56 percent of GBP while JG Summit owned 30 percent. Meralco PowerGen owns the balance of 14 percent.
As a result of the transaction, Meralco PowerGen will own 100 percent of GBP, the leading power producer outside Luzon with a gross capacity of 1,091 megawatts. The company has assets in the Visayas and Mindanao.
GBP has almost 30 power generation facilities spread across the Visayas and Mindoro with more than 850 MW of coal and diesel powered generating capacity and more than 1.3 gigawatts for further expansion.
The main development project is a 670-MW coal-fired plant in La Union, Pangasinan.