UPDATE 1-CPFL to buy AES unit in first major Brazil power deal since 2014
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SAO PAULO, June 16 (Reuters) - CPFL Energia SA, Brazil's largest non-government electric utility, said it would buy a rival distributor owned by AES Corp for 1.7 billion reais ($486 million), the first major deal in the country's beleaguered sector in two years.
The acquisition of Porto Alegre, Brazil-based AES Sul SA, which has about 1.3 million clients and 5.5 billion reais in annual revenue, should strengthen CPFL's growth in the distribution segment, executives said during a Thursday conference call.
The company will pay about a third of the purchase price in cash, the executives said.
The transaction still requires approval from antitrust and electricity industry watchdogs. It is the first major acquisition since Energisa SA's $2 billion purchase of Grupo Rede Energia SA in 2014.
Utilities have suffered since the former ruling Workers Party's government renegotiated licenses in 2012, leading to abrupt changes in pricing.
Shares of CPFL, which have risen 33 percent this year, were up 2 percent on São Paulo's stock exchange. AES Corp stock, which has fallen 16 percent this year, was up 1 percent on the New York Stock Exchange.
Arlington, Virginia-based AES Corp, which operates in 17 countries, had signaled the sale of AES Sul as one of its goals for this year. It has tried to sell some Brazilian units for some time, sources said recently.
Over the past decade, CPFL has bought three distribution companies. With AES Sul, its market share in the local distribution industry will rise more than one percentage point to about 14.3 percent, executives said on the call. Continuación...