No formal mandate yet, but companies have re-engaged following the asset merger between 3R and Enauta

04/25/2024

---

Eneva’s Parnaíba thermal complex in Maranhão: company is in talks to merge with PetroReconcavo — Foto: Divulgação

Eneva and PetroReconcavo have resumed discussions on a potential merger of their businesses, Valor has learned, after their ongoing negotiations with other rivals were previously unsuccessful. According to sources, Eneva’s interest in the merger lies in gaining access to gas. There is no formal mandate yet, but the companies have come closer again after 3R and Enauta formalized their asset combination.

There is still no defined structure for how the transaction might proceed. Following the progress of discussions between Enauta and 3R, companies in the energy and oil & gas sectors began initiating dialogues among themselves. In the case of Eneva, negotiations with Vibra did not progress as the fuel distributor saw no advantage in the share exchange ratio between the two companies.

When approached to comment on the potential merger, both companies declined. However, on Wednesday night, after consultations with the Securities and Exchange Commission of Brazil (CVM), both companies denied the merger talks.

Eneva’s market capitalization on B3, the Brazilian stock exchange, stands at R$19.4 billion, while PetroReconcavo’s is R$6 billion. The most likely transaction on the table would be a share exchange, sources suggest.

Other sources confirmed that Eneva and PetroReconcavo had previously started discussions in the recent past but did not move forward. Eneva has also been in talks with other potential energy sector competitors to seek partnerships.

These talks come at a time when junior oils are preparing for a sector consolidation, initiated by a memorandum of understanding signed between Enauta and 3R. Concurrently, other discussions in the sector are ongoing. For instance, Seacrest is reportedly seeking a buyer, as previously reported by Valor.

PetroReconcavo had begun preliminary talks with 3R, but the latter ended up being approached by Enauta. Enauta may have left the door open for future consolidation in the newly combined company, which could potentially include PetroReconcavo.

Eneva has shown a keen interest in growth through mergers and acquisitions, although its significant debt is a concern, sources say. The energy company is, for instance, in the process of purchasing thermal power plants from Eletrobras, a deal estimated at R$8 billion.

A source linked to the shareholders mentioned that the company could call for a capital increase, supported by two major partners—BTG and BW, with the Moreira Salles’s family office providing the funds.

For Eneva, it makes sense to merge its assets with another company focused on natural gas, according to sources.

The energy companies are also experiencing a strong wave of consolidation, with several mergers and acquisitions underway this year. Valor reported this week that there are at least R$30 billion in ongoing purchases and sales of sector assets.

*Por Fernanda Guimarães, Mônica Scaramuzzo — São Paulo

Source: Valor International

https://valorinternational.globo.com/