SDG&E; Stock Falls $4.875; Edison’s Rises

San Diego Gas & Electric’s stock tumbled $4.875 a share to $38.625 Wednesday after its proposed merger with SCEcorp was iced.

That 11% drop was on trading volume of just 754,400 shares--not much, given SDG&E;’s 56 million shares outstanding. Still, many big SDG&E; shareholders expressed shock at the Public Utility Commission’s move.

“I’m startled,” said Robert McCullough of money management firm McCullough, Andrews & Cappiello in San Francisco. Given the cost savings the two utilities had projected, McCullough said, “Are they (the commission) saying that the companies were lying?”

SDG&E; stock had moved down from $45.25 last week to $43.50 by Tuesday as some traders made early bets against the deal. Even at $45.25, it traded well below the roughly $50-a-share value of SCEcorp’s offer (1.3 SCEcorp shares for each SDG&E; share).

Wednesday, the market simply put SDG&E;’s stock back on par with that of other independent utilities, said Paul Wayne, research chief at brokerage Crowell, Weedon & Co. in Los Angeles.

SCEcorp’s stock, meanwhile, rose 75 cents to $39.50. Because its earnings won’t be diluted by a merger, investors put a higher value on its stock.

As for SDG&E;, “Our target price was $38 if the deal didn’t go through,” Wayne said. At that price, the stock trades in line with that of other utilities--about 11 times estimated 1991 earnings per share, with a yield of 7% based on the $2.70-a-share annual dividend.

So Wayne doubts that the stock will fall much further. Still, while McCullough said that “you can live with” the stock at the current level, major questions remain about SDG&E;’s future and thus whether big investors will stay with it.

A spokesman for another large SDG&E; owner, Sit Investment Associates in Minneapolis, agreed that “there are obviously going to be some reassessments coming.