CVM denies appeal by CPFL Renovaveis minority shareholders

Brazil's Securities and Exchange Commission (CVM) has denied an appeal by minority shareholders of CPFL Energias Renovaveis SA (BVMF:CPRE3) looking to get a higher buyout offer from State Grid Corporation of China.

The decision, which was made by CVM's board, comes after its Securities Registration Superintendence (SRE) ruled that State Grid's offer of BRL 13.81 per share was too low and needs to be raised to at least BRL 14.60 (USD 3.89/EUR 3.37) apiece.

According to CVM, when calculating the price of its offer, the Chinese company has to take into consideration the earnings before interest, taxes, depreciation and amortisation (EBITDA) data of CPFL Energia SA (BVMF:CPFE3) -- CPFL Energia Renovaveis' parent company -- including projections, for the period 2016-2020 based on International Financial Reporting Standards (IFRS).

The minority shareholders that were applicants in this case did not agree with the calculation methodology. They say that the use of EBITDA projections of both companies would not ensure equal treatment for minorities because there are differences in the business models of CPFL Energia and its renewables arm, as well as in their taxation regimes, indebtedness profile and concession periods.

State Grid is the majority owner of both CPFL Energia Renovaveis and its parent company CPFL Energia since January 2017.

(BRL 1 = USD 0.27/EUR 0.23)

(This article was updated on October 11 to correct wording)

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