Spanish Utility Deals for Brazilian Firm

Thursday, January 20, 2011 @ 09:01 AM gHale

In a move to build a stronger footprint in Latin America, Spain’s top power utility, Iberdrola SA, will pay $2.4 billion to buy Brazilian power company Elektro Eletricidade e Servico SA.

U.S.-based Ashmore Energy International (AEI) owned Elektro Eletricidade e Servico. Iberdrola will also assume Eleckro’s $495.8 million in debt.

For AEI, a company founded by executives from now-defunct energy giant Enron, the sale was just one of 10 divestments unveiled Wednesday. In a restructuring move, AEI agreed to sell 80% of its assets for $4.8 billion.

The deal marks Iberdrola’s latest step in a global expansion after a series deals in the U.K. and U.S. markets.

“Iberdrola ratifies its decisive bet to continue growing in Brazil, one of the key countries in its international expansion strategy,” company officials said.

Iberdrola said it plans to unite Elektro with Neoenergia, another Brazilian utility in which the Spanish company owns 39%. Together, the two firms will have about 26 million clients, making the combined entity one of the largest power companies in the Brazilian market, Iberdrola said.

Iberdrola said it sees Brazil as one of the countries with the highest growth potential in the region. “If attractive business opportunities appear, Iberdrola will continue expanding its presence in Brazil,” the company said.

Spain remains the company’s biggest market, followed by the U.K. Iberdrola’s Latin America operations, which are mostly in Brazil and Mexico, is the third biggest part of the company.

Elektro, founded in 1998, distributes electricity to 2.17 million clients, mostly in the State of Sao Paulo. The deal should close in three to six months, Iberdrola said.

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