Jan. 11 (Bloomberg) -- EON AG, Germany’s biggest utility, agreed to buy a 10 percent stake in billionaire Eike Batista’s MPX Energia SA to expand in Brazil and Chile.
MPX will raise about 1 billion reais ($556 million) through a capital increase with EON investing 850 million reais for the stake, according to a statement today. The companies will set up a joint venture to develop 20,000 megawatts of power plants.
“The deal fits with EON’s strategy to generate growth in quickly growing non-European markets and minimize risks by teaming up with partners,” Bernhard Jeggle, an analyst at Landesbank Baden-Wuerttemberg AG, said by phone.
EON is expanding overseas after the utility saw profits reduced at home following Chancellor Angela Merkel’s March decision to shutter the country’s eight oldest nuclear reactors as a response to the Fukushima disaster in Japan. MPX owns 11,000 megawatts in licensed power plant projects, EON said.
Today’s deal will “enable us to create significant value in thermal and renewable power generation in Brazil,” EON Chief Executive Officer Johannes Teyssen said in the statement.
The move comes less than a month after EON said it would invest 7 billion euros in renewable energy projects in the next five years. The utility in November posted a 64 percent slide in nine-month profit because of the accelerated nuclear phaseout and lower earnings on gas wholesaling.
The companies expect to close the transaction in the second quarter.
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