Brazilian power company Equatorial agrees to buy Enel’s Celg-D

A logo of Italian multinational energy company Enel is seen at the Milan headquarters, Italy, February 5, 2020. REUTERS/Flavio Lo Scalzo

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SAO PAULO, Sept 23 (Reuters) – Brazilian power company Equatorial Energia SA (EQTL3.SA) has agreed to acquire local electricity distributor Celg-D, a securities filing showed on Friday, ending the reign of Italy’s Enel SpA (ENEI.MI) over a firm that has long struggled with quality issues.

Equatorial said it will pay 1.58 billion reais ($309 million) for Celg-D in a deal that also includes a 5.71 billion-real debt restructuring.

Reuters had reported earlier this year, citing sources, that Enel was in talks to sell Celg-D, which distributes power to 3.3 million customers in Brazil’s center-west state of Goias. read more

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The Italian firm paid 2.1 billion reais to buy Celg-D from the state and Eletrobras (ELET6.SA) in a privatization in 2016, but the company has ranked among the worst Brazilian power distributors in terms of service quality, failing to reach some minimum regulatory levels, according to power regulator Aneel.

Goias Governor Ronaldo Caiado, who is up for re-election, cheered the deal, saying it was a fundamental step for the state to overcome power distribution issues.

“We will closely monitor the transition and services provided by the new company,” Caiado added on Twitter.

Equatorial said in its filing that the deal will allow it to diversify its distribution portfolio by entering a new region.

Chief executive Augusto Miranda already said last month that the company was interested in expanding its power distribution activities, although he declined to answer questions about Celg-D at the time. read more

CPFL Energia SA (CPFE3.SA), controlled by China’s State Grid Corporation, and EDP Energias do Brasil SA (ENBR3.SA), controlled by Portugal’s EDP (EDP.LS), also analyzed the deal but decided not to bid, Reuters reported. in July.

Equatorial and Energisa SA (ENGI11.SA) ended up being the only companies still interested in Celg-D.

The deal still requires approval from Brazil’s antitrust watchdog CADE and Aneel, Equatorial said.

($1 = 5.1171 reais)

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Reporting by Gabriel Araujo; editing by Jason Neely, Kirsten Donovan

Our Standards: The Thomson Reuters Trust Principles.

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