Brazil: Enel Américas announces sale of distribution company for US$1.4 billion
After a process of asset rotation, Enel Américas, the Italian company’s investment arm in most of the continent, announced the sale of its distribution company in Brazil, Enel Goiás.
The buyer is reported to be the local firm Equatorial Energia, which will pay around US$1.4 billion. This company already serves 22% of the country and 12% of the customers.
To achieve this, an extraordinary meeting of the board of Enel Américas was called for September 28, 2022.
In addition, it must receive authorizations from the Brazilian regulatory agencies National Electric Energy Agency (ANEEL) and Administrative Council for Economic Defense (CADE).
Of the price to be received by Enel Brasil, US$300 million corresponds to its equity stake and would be paid at the transaction’s closing, possibly in December.
Another US$1.1 billion would be for the payment of intercompany loans, of which US$600 million corresponds to Enel Brasil and another US$500 million to Enel Finance International, a related company, payable in the next 12 months after closing.
“In addition to this amount, the parties have agreed on an earn-out payment mechanism, depending on the outcome of certain contingencies that are in progress, whose estimate at this date is not quantifiable,” the company explained.
The value of the transaction is below market expectations, which had talked about US$2 billion when several candidates emerged.
In 2016, Enel had paid around US$640 million for this company, which today has a concession of 337 thousand square kilometers, with 3.3 million customers in 237 municipalities.
As a result of the transaction, “Enel Américas would record a loss in its consolidated net income of approximately US$990 million. This amount does not include the eventual additional earn-out revenues indicated above”.
In a statement, Enel informed, in Italy, that “the transaction is in line with the Enel Group’s current Strategic Plan, as it contributes to the objective of constantly improving and optimizing the risk-return profile of the group and its asset base, focusing on core businesses”.
It added that “the sale of Enel Goiás is in line with the Enel Group’s current strategy in Brazil to focus the distribution business on networks located in urban areas and to make the most of the opportunities arising from the group’s integrated footprint in the context of the energy transition, leveraging on the significant change expected to occur in distributed generation and smart grids in the coming years.”
In reporting the transaction, Equatorial Energia – which BTG Pactual advised – explained that with the transaction, “the company diversifies its operations in the energy distribution segment to one more geographic region, demonstrates its unique approach in identifying opportunities, guided by financial discipline in capital allocation, and reinforces its consolidating role in distribution, expanding opportunities to generate value as an integrated player in the energy sector and adding more than 3.3 million customers to our base”.
With information from DF SUD
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