October 01, 2013

JG Summit buying Meralco stake at discounted price

JG Summit Holdings Inc. agreed to acquire San Miguel Corp.’s 27-percent stake in Meralco for around P72 billion or roughly P236 apiece.

Wealth Securities Comment: JGS's entry was valued at 8.1x forward EV/EBITDA and 13.4x forward PER of Meralco, which is at the lower end of our expected range (indicative of buyer's price). Funding the purchase at say 5.1% ('12 avg funding cost), the purchase should be net positive to JGS on an annualized basis. - WealthSec