Equatorial Energia SA and CPFL Energia SA are both considering buying a power distribution firm owned by Italy’s Enel SpA in Brazil, they said on Tuesday, although noting that any potential deal remains distant.
The energy companies confirmed in separate security filings they were eyeing the acquisition of Enel Ceara, a company formerly known as Coelce that distributes power in the northeastern state of Ceara.
Enel had previously announced it would look for buyers for the business in order to focus on distribution networks in megacities such as Sao Paulo and Rio de Janeiro, drawing interest from other major players in the Brazilian market.
Equatorial and CPFL were both responding to local media reports that they were the top contenders for the Enel subsidiary, but both tried to distance themselves from completing a deal.
Equatorial said it is keeping an eye on all existing opportunities in the Brazilian power distribution sector, which includes Enel Ceara, but added that the “process of studying the referred asset is still in an uncertain, preliminary stage”.
CPFL, which is backed by China’s State Grid Corp, had already said it would consider the acquisition. It added on Tuesday it has hired Banco Santander and Pinheiro Neto Advogados as financial and legal advisors, respectively.
“However, it should be noted that so far there is no proposal presented or any agreement, binding or non-binding,” CPFL noted. “So there is no guarantee that a transaction will be carried out between the parties.”
Shares in CPFL were up more than 2% in Sao Paulo morning trading, while Equatorial’s shares rose 0.4%.
EDP Brasil, the local subsidiary of Portugal’s EDP, had previously said it was also studying buying Enel Ceara.
But newspaper Valor Economico did not name it as one of the final contenders in a report earlier this week, instead saying the deal was now between Equatorial and CPFL. Valor reported the transaction could be worth 8 billion reais ($1.60 billion).
Source: Reuters.com