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UPDATE - Enel to settle tender bid for Eletropaulo on June 7

Enel

June 6 (Renewables Now) - Enel SpA (BIT:ENEL) will settle its BRL-5.55-billion (USD 1.47bn/EUR 1.25bn) acquisition of a 73.4% stake in Brazil's Eletropaulo (BVMF:ELPL3) on June 7, using short-term bank financing arranged and secured by its Americas arm.

Minority shareholders in Eletropaulo will then have until July 4 to sell their interest to Enel Brasil Investimentos Sudeste SA, the bidding subsidiary of the Italian energy major, for the same price of BRL 45.22 per share, according to a Tuesday statement by the buyer.

The short-term bank financing for the transaction was arranged by Enel Americas. However, according to a report by Reuters from last month, Chilean minority shareholders of Enel Americas were unhappy with this plan and were preparing, at the time, for a possible legal complaint. Reuters said they thought the price was too high and that was even before Enel improved its offer from BRL 32.20 to BRL 45.22 per share.

The buyer has reiterated several times that the acquisition will be followed by a capital hike of Eletropaulo for at least BRL 1.5 billion. The purchase of the controlling stake has already been cleared by local antitrust authority CADE and is pending approval by energy regulator ANEEL in the coming days.

The Italian energy group managed to outbid Iberdrola SA (BME:IBE) subsidiary Neoenergia SA for control over the power distributor. The acquisition will make it the largest distribution operator in Brazil with 17 million customers, including 7.1 million coming from Eletropaulo, and a market share of more than 20%.

Francesco Starace, the CEO of Enel, said that the company will use its expertise as one of the largest network operators globally to strengthen and digitalise the Sao Paulo grid. Its Americas arm has planned to spend some EUR 1.5 billion (USD 1.76bn) in Brazilian networks between 2018 and 2020.

Enel says it considers Eletropaulo to be a strategic asset for its growth plans in Brazil, where the Italian company also has a generation business and operates two transmission lines. Enel Green Power Brasil Participacoes Ltda (EGPB) is the country’s largest solar and wind player when it comes to installed capacity and project portfolio. The group operates 3 GW in Brazil, including 1.3 GW of hydroelectric plants, about 700 MW of wind farms and over 700 MW of solar power stations.

(BRL 1.0 = USD 0.263/EUR 0.225)

(EUR 1.0 = USD 1.171)

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Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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