UPDATE 2-San Miguel keen to buy $840 mln Meralco stake

* San Miguel says keen to hold majority in Meralco

* Says will buy more Meralco shares if invited

* Additional 13.4 pct Meralco stake worth about $840 mln * Meralco shrs jump as much as 14.9 pct; San Miguel flat (Adds comments from analysts, officials; updates share prices)

By Rosemarie Francisco

MANILA, Aug 10 (Reuters) - Philippines' food-to-power conglomerate San Miguel Corp (SMC) (SMC.PS) said on Monday it was keen to gain a majority in Manila Electric Co (MER.PS) but analysts say it is a toss up as to who could end up owning the country's largest power retailer.

San Miguel SMCB.PS, Southeast Asia's largest food and drinks maker now venturing into heavy industry, said it was ready to buy a 13.4-percent stake from the Lopez family to gain control of Meralco, a deal that may be worth as much as $840 million. "Only if invited by Lopez to bid, yes SMC will bid," Ramon Ang, San Miguel's president, told Reuters in a text message. The Lopez family, a powerful business clan in the Philippines with major interests in power and media, has been running the power utility for decades.

Ang said San Miguel would partner with a Japanese group, which he did not name, to bid for the Lopez group's stake.

But the Lopez family said it has not offered its remaining shares to any investor, adding the PLDT (TEL.PS) group has first rights on the stake.

"We have not offered our remaining Meralco shares to any group," said Benjamin Lopez, vice president of the power conglomerate First Philippine Holdings Corp (FPH.PS) owned by the Lopez family. "PLDT has right of first refusal."

The Lopez family sold a 20 percent block to a PLDT unit in March for $414 million, a deal that whittled down its holdings in Meralco.

TAKEOVER BATTLE?

A family decision to sell out of Meralco may trigger a bitter takeover battle. The buyer of the family's Meralco stake would have to make a tender offer for the remaining shares and the losing group will probably be forced to sell out, analysts say.

"We think what will happen is the winner will end up with a significantly large portion of Meralco shares, probably around 70 percent or so," said Prince Yeung, analyst at AB Capital Securities.

Jomar Lacson, head of research at broker Campos, Lanuza & Co, said: "The race is neck and neck...The winner here really is the Lopez group because they get the premium. They were able to unlock Meralco's value 10 times over."

Meralco has become an attractive target for both food-to-power conglomerate San Miguel and Philippine Long Distance Telephone Co. as both firms can piggyback on its retail electricity network to offer telecommunications services.

"The question here is will Ramon Ang execute," said a senior research analyst at a foreign brokerage firm.

"At the moment, it is all a game of words and playing the press up. If they are really serious, then they should be putting the money down soon, but it could be a classic case of greenmail."

The PLDT group said in May it controls about 48 percent of Meralco together with some business partners and the remaining stake held by the Lopez family through First Philippine Holdings. "We have the right of first refusal on their shares, but it is a passive right," PLDT chairman Manuel Pangilinan told reporters. "Every (shareholder) has the right to offer the Lopezes, they have the right to receive the offer. We will deal with them when it happens."

Pangilinan also said the PLDT group's investment in Meralco is for the long term.

San Miguel currently has a direct 27 percent stake in Meralco which it bought for over $600 million last year. It has said it controls a total of about 43 percent in Meralco through holdings of its business allies.

Meralco said it had a total of 1.1 billion outstanding shares. San Miguel's planned 13.4 percent stake purchase could be worth as much as about 40 billion pesos ($840 million) based on Monday's highest price of 270 pesos per share in Meralco.

Shares of Manila Electric jumped as much as 14.9 percent on Monday before paring its gains to close at 262.5 pesos, or a gain of 11.7 percent. Meralco is the second-best performing stock in the Philippines market this year with a gain of 295 percent.

Both San Miguel's A and B shares were flat compared with the broader market .PSI which closed up 2.43 percent. PLDT gained 1.43 percent.

($1 = 47.7 pesos) (Additional reporting by Manolo Serapio Jr; Editing by Valerie Lee)