China eyes to set foot in Brazil's energy sector with CPFL Energia SA deal. (Photo : Getty Images)
Two government sources told Reuters that China's State Grid International Development Ltd., the world's largest utility, is eyeing to buy minority stakes in Brazil's CPFL Energia SA for 20 billion reais ($6 billion).
CPFL Energia is currently the biggest non-state-owned group of electric energy generation and distribution in the South American country. It is also regarded as Brazil's third largest electric utility firm.
In a March interview, State Grid then-chairman Liu Zhenya shared that the firm is not limited as to how much it can spend to expand.
State Grid is reported to be granting the same price it offered to Camargo Correa SA, CPFL's biggest stakeholder, according to Reuters' sources who requested for anonymity.
The article noted that Camargo Correa agreed to sell its stake for 5.85 billion reais ($1.76 billion), receiving 25 reais per share. The share price skyrocketed to nearly 22 percent more than the share price a day before the announcement of the said deal.
Meanwhile, the pension fund for the employees of CPFL's controlling block composed of Banco do Brasil, Participacoes and Previ, who are still undecided whether they will sell their stakes, Reuters wrote.
CPFL's shareholders agree to make their decision in 60 days.
"Previ is technically analyzing the opportunity," the fund said in a statement published through its press office.
China's State Grid would have to extend its offer to all CPFL's shareholders, as required by Sao Paulo-based stock exchange, BM&F BOVESPA.
As of Friday afternoon, CPFL shares were valued at 22.46 reais, down by 0.18 percent.
For the past months, China has been making acquisitions globally as the country eyes to foster state-owned companies. Chinese President Xi Jinping aims to let market forces play in strengthening government-back businesses.
