SAO PAULO, Oct 19 Reuters Shares in Brazilian energy company Companhia Energetica de Sao Paulo CESP rose more than 2.5% in early trade after conglomerate Votorantim SA and Canada Pension Plan Investments proposed to merge their energy assets in Brazil.
Votoarntim said the Brazil assets a proposed cash injection the three companies owned and under the planned deal would have a total value of 17.2 billion reais $3.09 billion Less than an hour after the Sao Paulo bourse started trading, CESP shares were up 2.5% at 24.89 reais.
Currently CESP has both CPP and Votorantim as controlling shareholders.
Goldman Sachs analysts said to clients in a note that the deal is positive for CESP as it will reduce its exposure to hydropower, as Votorantim and CESP operate wind farms and an energy trading business.
Still, analysts said that they are waiting for more details about the assets' valuation to assess the deal. An independent committee will determine the final exchange ratio for CESP shareholders. Analysts at Credit Suisse have described the proposed deal as detrimental to minority shareholders.
The proposed terms seem not to favor minority shareholders particularly because the value implied for Cesp's shares is below market consensus for fair value, Credit Suisse analysts said in a note.