Spain’s biggest power utility, Iberdrola, is set to acquire Brazil’s Elektro for €2.4 billion in a move designed to expand its presence in growing markets.
The purchase of Elektro, a distribution company which serves 2.2 million clients in Sao Paulo state, will turn Iberdrola into one of the leading operators in Brazil’s electricity sector. It will also complement the company’s existing presence in north-eastern Brazil.
Bilbao-based Iberdrola bought the equivalent of 99.68 per cent of Elektro's capital from AEI, the investment vehicle controlled by UK investment company Ashmore Group.
It is thought that Elektro (or Elektro Electricidade e Servicos) will be integrated into Neoenergia, an affiliate in which Iberdrola holds 39 per cent. Previ, the pension fund for Banco do Brasil, has 49 per cent; and the bank itself holds the remaining 12 per cent.
The deal comes as players in Brazil's power distribution sector seek to consolidate in order to cope with government pressure to cut rates. Power distribution in Brazil is currently 68 per cent dominated by private players.
In 2009, Elektro posted earnings of €335 million and a net profit of €215 million.
For Iberdrola, Brazil accounted for more than seven per cent of group earnings in 2009.
In the first nine months of last year, Iberdrola’s overall net profit rose two per cent to €2.07 billion from the same period in the previous year. Nearly two-thirds of its profit during that time came from outside of Spain.
