Overview

• The utility agreed to buy 74.9% of Emae’s voting shares from Phoenix via Vórtx at R$59.33 and 66.8% of preferred shares from Eletrobras at R$32.07, which would give Sabesp 70.1% of the company for about R$1.13 billion.
• Closing is subject to clearances from Cade, Aneel and Arsesp, and Sabesp estimates roughly 60 days to complete the transaction once approvals are in place.
• Sabesp frames the acquisition as a way to integrate the Billings and Guarapiranga systems, targeting treatment of about 7,000 liters per second with new stations at Jardim Shangrilá (1,000 l/s) and Jardim Ângela (2,000 l/s) and expanded inter-reservoir pumping.
• Emae said it received notice of early maturity of Phoenix debentures guaranteed by Emae shares and stated it did not participate in the negotiations announced by Sabesp and Eletrobras.
• Phoenix-linked investor Nelson Tanure is reported to plan a court challenge to the deal, and Sabesp noted earn-out provisions in the Eletrobras agreement that could adjust the final price based on asset conditions and potential indemnities.