Enel SpA scooped up a 73.4% stake in Brazilian power distribution company Eletropaulo Metropolitana Eletricidade de São Paulo SA in a deal valued at approximately 5.55 billion Brazilian reais, or roughly €1.27 billion, the Italy-headquartered utility announced June 5.
The acquisition of 122,799,289 shares of Eletropaulo would make Enel the largest operator in the Latin American country with a market share of more than 20% of the distribution business.
Enel has a plan to invest at least €1.5 billion in Brazilian networks between 2018 and 2020. "Eletropaulo is a strategic asset for Enel's growth plans in Brazil since this distribution company operates in one of the country's most populated areas, with a constantly increasing urbanization trend and energy consumption needs expected to significantly increase in the coming years," Enel said in a news release.
Enel Brasil Investimentos Sudeste SA's per-share offer of 45.22 Brazilian reais was the highest among the bidders, which also included Iberdrola SA-controlled Neoenergia SA. Neoenergia had submitted a bid of 39.53 Brazilian reais per share of Eletropaulo.
Enel also plans to invest at least 1.5 billion Brazilian reais, or roughly €343 million, to subscribe to a subsequent capital increase at Eletropaulo.
The acquisition will be funded with short-term bank financing arranged and secured by Enel Américas SA, the controlling shareholder of Enel Brasil.
The deal is expected to be settled on June 7, in line with Brazilian stock exchange regulations. The Brazilian Administrative Council for Economic Defense has approved the deal, while the Agência Nacional de Energia Elétrica is expected to approve the transaction in the coming days.
Eletropaulo shareholders have until July 4 to complete the sale of their remaining shares to Enel Sudeste at the same price.
As of June 4, US$1 was equivalent to 3.75 Brazilian reais.
