EXCLUSIVE Italy’s Enel in talks to sell Brazilian distributor Celg-D, sources say

(Reuters) – Italy’s Enel SpA (ENEI.MI) is in talks to sell its Brazilian power distributor company Celg-D in a deal that may reach $2 billion, three sources with knowledge of the matter said.

Among companies interested in acquiring Celg-D, which distributes power in the Brazilian center-west state of Goias and serves 3.27 million customers, are Brazilian rivals CPFL Energia SA (CPFE3.SA), controlled by State Grid Corporation of China, Neoenergia SA (NEOE3.SA), controlled by Spain’s Iberdrola (IBE.MC) and EDP Energias do Brasil SA (ENBR3.SA), in which Portugal’s EDP (EDP.LS) is the largest shareholder.

Other suitors of Celg-D, valued at around 10 billion reais ($2.14 billion) including debt, are Brazilian rivals Energisa (ENGI11.SA) and Equatorial Energia SA (EQTL3.SA). Celg-D’s equity value is around 5 billion reais.

Enel and Neoenergia declined to comment. CPFL, EDP Energias do Brasil, Equatorial and Energisa did not immediately reply to requests for comment.

Itau Unibanco Holding SA’s investment banking unit is advising Enel.

Enel paid 2.1 billion reais to acquire Celg-D from Brazil’s Goias state and federal power holding company Centrais Eletricas Brasileiras, known as Eletrobras (ELET6.SA), in a privatization auction in 2016. In 2020, Goias Governor Ronaldo Caiado criticized Enel for the quality of Celg-D’s service.

Celg-D is among the worst Brazilian power distributors in quality of service, according to rankings published by Brazilian power regulator Aneel. Last year, the company was the third worst among 29 companies.

Enel owns in Brazil four power distribution companies in the states of Sao Paulo, Rio de Janeiro, Ceara and Goias, serving 18 million customers.

EDP Brasil could have large synergies if it acquired Celg-D. The company last year acquired transmission company Celg-T for 2 billion reais in a privatization auction. EDP Brasil CEO João Marques da Cruz told investors last week the company would consider bids for power distributors on sale.

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