Brazil’s CESP sets financial terms for merger with Votorantim, CPPIB

SAO PAULO, Jan 10 (Reuters) – Brazilian power generation company Companhia Energetica de Sao Paulo (CESP) said on Monday it had successfully concluded negotiations on financial terms with conglomerate Votorantim SA and the Investment Board of the Canada Pension Plan to merge its energy assets in Brazil. .

CESP is expected to become a wholly owned subsidiary of Votorantim and CPPI’s VTRM Energia joint venture once the deal is completed.

According to a securities filing, as part of the agreement, CESP shareholders will receive 6.57 new common shares and 0.1 new preferred shares of VTRM for each CESP share.

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The company clarified that Votorantim SA will hold a 37.74% stake in VTRM after the transaction, while CPPIB will hold a 31.94% stake and the other shareholders are expected to hold a combined stake of 30.32%.

CESP added that it was valued at around 9.1 billion reais ($1.61 billion), or 27.93 reais per share, regardless of share class. Its ordinary shares closed at 20.40 reais on Friday while its preferred shares closed at 19.75 reais.

Votorantim Energia had its assets valued at around 2.8 billion reais, while CPPIB will inject 1.5 billion reais in cash into VTRM, he said.

The first part of the deal, when controlling shareholders will contribute cash and assets to VTRM, is expected to close in early February. The second phase – with VTRM incorporating CESP shares and therefore listed on the Brazilian stock exchange B3 – is expected to take place by April 2022.

($1 = 5.6353 reais)

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Reporting by Gabriel Araujo; Editing by Toby Chopra and Chizu Nomiyama

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