UPDATE 1-PLDT forges deal to raise Manila Electric stake

* Lopez clan sells half of its Meralco stake for $471 mln

* Deal raises PLDT group's Manila Electric stake to 41.4 pct

* Deal is via loan, call option exercisable until March 2010

(Adds company statement, background)

By Rosemarie Francisco

MANILA, Nov 5 (Reuters) - The PLDT group (TEL.PS) forged a $471 million deal on Thursday for a 6.7 percent stake in Manila Electric Co (Meralco) (MER.PS), edging out rival San Miguel Corp (SMC.PS) and cementing its control over the utility.

First Philippine Holdings (FPH.PS), the holding firm of the Lopez business clan, said it had agreed to sell 6.7 percent -- half of its holdings -- in Meralco to Metro Pacific Investments Corp (MPIC) (MPI.PS), an affiliate of the PLDT group.

The deal gives PLDT a direct stake of 41.4 percent in Meralco and with First Holdings voting with the group, it will effective controls 48 percent of the power retailer.

The Lopez clan said for now it would hold on to the remainder of its shares in Meralco, which are equivalent to one board seat.

San Miguel has said it and its allies own about 43 percent of the utility.

"Metro Pacific Investments Corp exercised its right of first refusal and matched the Triratna offer for a Meralco valuation of 300 pesos per share," a statement from First Holdings said.

Triratna is an investment company headed by the son of the country's leading tycoon Henry Sy. On Friday, it made a surprise offer to purchase First Holdings' entire 13.4 percent stake in Manila Electric for $940 million. [ID:nMAN347240]

Sy, a business ally of the San Miguel president, had offered 300 pesos per Meralco share, forcing Metro Pacific, already in the midst of talks with First Holdings, to match the offer.

Meralco owns the country's largest power franchise and has become an attractive target after regulators allowed it to raise power tariffs by up to 27 percent, its first hike since 2003.

"It reflects a valuation that shows the strong growth prospects of Meralco," First Holdings Chairman Oscar Lopez said in a statement about the deal.

"The proceeds no doubt will allow First Holdings to pursue its new directions and further establish itself in the country as the premier renewable energy provider."