SAN MIGUEL Global Power Holdings Corp. (SMGP), the power arm of San Miguel Corp. (SMC), has acquired a 3.8% stake in Manila Electric Co. (Meralco) for P3.9 billion following a long-delayed deal with the Land Bank of the Philippines (LANDBANK).

SMC disclosed the transaction to the stock exchange on Wednesday, following a report by news site InsiderPH.

“Such shares were transacted in the Philippine Stock Exchange this morning through 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 (CA),” the company said.

SMGP acquired 43.23 million common shares of Meralco at P90 each — about 83% lower than Meralco’s Tuesday closing price of P540.50.

On Wednesday, Meralco shares rose 0.83% to close at P545.

The deal marks the conclusion of a long-running legal dispute between SMGP and LANDBANK.

In 2008, SMGP — then known as Global 500 Investment — entered into a share purchase agreement with LANDBANK involving Meralco shares.

LANDBANK later rescinded the deal, prompting SMGP to sue for damages, arguing that the cancellation was unjustified.

In November 2022, the Court of Appeals sided with SMGP, ruling that the bank’s decision to withdraw from the agreement had no factual basis.

At the time, the deal was worth P4.19 billion, plus interest of P553.85 million.

LANDBANK had argued that the sale would be “grossly disadvantageous to the government,” as the shares were involved in a just compensation case with the Department of Agrarian Reform — a claim the court ultimately rejected.

“Their P3.9-billion stake in Meralco has already grown five times in value, so cashing out now locks in a substantial profit,” said Moses Frando, head of sales and trading at Seedbox Securities.

Redirecting the proceeds into “high-impact projects or strategic acquisitions will drive diversified growth and strengthen the balance sheet,” he added.

Following the acquisition, SMC’s Meralco stake is now worth around P23.6 billion, implying a “windfall gain” of roughly P19.7 billion, according to DragonFi Securities Equity Research Analyst Franco M. Fernandez.

“Given that it’s been more than a decade and the scale of this unrealized gain, I think the SMC group would benefit from selling a portion or even all of its stake,” Mr. Fernandez said.

He added that if SMC retains the stake, it could benefit from Meralco’s dividend stream or upstream a portion of the gains to declare a special dividend, “rewarding long-term shareholders and boosting investor confidence.”

“Either way, this unexpected upside strengthens SMC’s consolidated balance sheet at value,” he said.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera