The transaction is expected to further Iberdrola’s expansion into international markets and contribute to its plan to boost its earnings before interest, taxes, depreciation and amortization by more than 20% in 2018, reported Bloomberg.
In February, Iberdrola announced its plans to invest €32bn from 2018 to 2020 to lay foundations for sustainable business growth in the next decade.
The Spanish energy company plans to put nearly half of the investment, €15.5bn in networks.On generation and retail, the Spanish utility will allocate €2.8bn, which is 9% of the €32bn investment.
Recently, Enel, through its Brazilian subsidiary Enel Brasil’s owned Enel Brasil Investimentos Sudeste, disclosed its plan to acquire the entire share capital of Eletropaulo for up to BRL4.7bn (€1.1bn).
Enel said in a statement: “The transaction is in line with the Enel Group’s current strategic plan and, if successfully executed, would mark another step forward in strengthening the Group’s presence in the Brazilian distribution sector.”
Enel further said that the exercise of the voting rights of the shares purchased by Enel Sudeste in Eletropaulo will be subject to approval from the Administrative Council for Economic Defense (CADE), the Brazilian antitrust authority.
Headquartered in Barueri, Electropaulo is one of the largest power distribution companies in the country. It serves more than 18 million customers across 24 municipalities in the metropolitan region of São Paulo.
A majority of Electropaulo’s shares are owned by Energisa, an electric services company based in Rio de Janeiro.
Eletropaulo earlier said in a statement: “Eletropaulo will use the resources to reinforce its capital structure, improve its indebtedness profile, as well as to invest in operational improvements, which are already set in its investment plan and restructuring that is being implemented.”
