March 29, 2023

Breaking: EDP Brasil: Controller wants to go private at 22% premium

EDP ​​proposes delisting EDP Brasil – a move that would take the power generation, distribution and transmission company off the stock market after nearly 20 years of going public.

The Portuguese company controls EDP Brasil with 56.05% of the share capital. a free float 41.3% and the remaining shares are held in the treasury.

EDP ​​is offering to pay R$24 per share, a premium of 22.3% over yesterday’s closing price of R$19.63.

The bid price is also 6% higher than the bid price high all the time The share price (adjusted for dividend) reached in August of last year. It’s also 9% above the ceiling in the report by Ernst & Young, which rates the company at an A squeak From 20.20 BRL to 22.09 BRL.

The decision to write off EDP Brasil has nothing to do with the share price — which fluctuates quite a bit given the defensive nature of the stock, which investors often buy in search of dividends.

A source close to the company told L.L.C Brazil Journal.

With NTN-B trading at around 6%, borrowing is becoming expensive in Brazil. By going private, EDP will be able to borrow euro debt at, say, 4%, and invest in Brazil at a much higher IRR than it would in Europe, earning that spread.

For the show to go forward, thirds free float Those in the auction agree to sell your shares.

The auction date hasn’t been set yet, and it should be a few more months before it’s called.

today is free float From EDP Brasil It is highly dispersed, with no shareholder owning more than 5% of the share capital. The largest are foreign managers such as Nordis and Vanguard, each of which owns about 2% of the capital.

There are also thousands of individual contributors.

I fall free float It was decided to sell, the transaction will transfer R$ 5.7 billion.

The OPA comes at a time when many other markdowns have hit the market. Recently, there have been offers to write off Boa Vista, Burger King Brasil, and BR Properties.

BTG Pactual and Morgan Stanley are the financial advisors to EDP.

Matos Filo is the legal advisor.

Peter Arbex