New conquest

13 October 2014 By Fiona Maharg-Bravo

The Spanish utility will pay $7.6 bln including debt for CGE, Chile’s largest electricity distributor. This increases Gas Natural’s footprint in Latin America, countering weak growth at home. But it is paying more than 10 times 2013 EBITDA with few obvious synergies.

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Spanish utility Gas Natural said on Oct. 12 it would launch a $3.3 billion takeover offer for Compania General de Electricidad (CGE), Chile’s biggest electricity distributor. The deal would be the largest-ever public takeover offer for a Chilean company.

At 4,700 pesos per share, the price represents a 32 percent premium to CGE’s previous closing price and a 72 percent premium to the average price over the last 12 months. Shareholders with 54 percent of CGE’s shares - the Marin, Almeria and Perez Cruz families - have already accepted the offer. The deal values CGE at 6 billion euros ($7.6 billion) including assumed debt.

The deal is part of Gas Natural’s long-term effort to expand in Latin America, where it is already present in six of the nine largest cities. CGE has more than 2.5 million customers and 40 percent of Chile’s electricity distribution market.

At 0904 GMT on Oct. 13, Gas Natural shares were trading down 0.2 percent at 21.7 euros.

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