Spanish supplier Gas Natural offers $3.3 billion to buy Chile's CGE

By RODRIGO ORIHUELA and CHARLES PENTY
Bloomberg

Gas Natural SDG offered as much as 2.6 billion euros ($3.3 billion) for Chile’s Cia. General de Energia as the Spanish gas supplier seeks to expand into new markets with its biggest acquisition in six years.

Gas Natural agreed to acquire 54% of CGE from a group of controlling stakeholders and will make a share tender offer for the remainder, the Barcelona-based utility said in a statement. Gas Natural will offer 4,700 Chilean pesos ($7.94) a share, according to the statement.

The acquisition will make Gas Natural Chile’s largest electricity distributor, with a 40% market share, as well as the country’s biggest power transmission-line operator. It will also control natural gas distributor Metrogas SA.

“It’s very material because it represents a significant entry into Chile, one of Latin America’s largest and most stable markets,” CEO Rafael Villaseca said on a conference call for analysts. “The acquisition of CGE enables Gas Natural to gain immediate scale in Chile.”

Gas Natural shares fell as much as 4.9% in Madrid and traded little changed at 21.70 euros at 2.30 p.m.

“This appears a good strategic fit,” Alberto Gandolfi, an analyst at UBS who rates Gas Natural sell, said in a report to clients. “But the bidding price seems expensive.”

Latin America

Gas Natural, which was founded in 1843 as a coal-based electricity supplier in Barcelona, is Spain’s third-largest gas company and present in 25 countries through natural gas and power distribution as well as liquefied natural-gas (LNG) operations, according to its website.

The company generated 30% of its 25 billion-euro revenue last year from Latin America, where it has operations in countries including Brazil and Mexico, according to data compiled by Bloomberg.

In June, the company signed an agreement to form a joint venture with Brazilian utility Cia. Energetica de Minas Gerais, which was granted regulatory approval this month.

The CGE acquisition is the biggest by Gas Natural outside Spain, the company said in the statement. In 2008, the utility bought Union Fenosa SA for about 16.8 billion euros.

Gas Natural maintains its strategic goals set out in 2013, the company said Monday in a presentation filed with regulators. It’s targeting net income of about 1.5 billion euros next year.

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