Spain's Iberdrola launches tender offer to acquire remaining stake in Brazil’s Neoenergia

Iberdrola has announced a public tender offer for the remaining 16.2% of its Brazilian subsidiary Neoenergia, hoping to achieve 100% ownership of the company.

The Spanish electricity group already owns 83.8% of Neoenergia's stock, and this latest acquisition comes shortly after it purchased a 30.29% stake from Caixa de Previdência dos Funcionários do Banco do Brasil (Previ).

In a press release, Iberdrola claimed that it is offering 32.5 Brazilian reais per share, which is updated based on Brazil's official SELIC interest rate.

The business underlined that the tender price corresponds to the value used in the transaction to buy Previ's stake in Neoenergia.

According to Iberdrola, this alignment demonstrates continuity and stability in the valuation of the Brazilian utility, which it regards as a strategic asset.

The company anticipates that the overall cost of the offer will be around €1.03 billion, which is comparable to about 6.4 billion Brazilian reais at current exchange rates.

This number is derived before any SELIC rate adjustments and assumes that Neoenergia will not pay interim dividends.

Iberdrola warns that ultimate costs may vary based on interest rate movements and Neoenergia's corporate actions during the offer period.

Simplifying structure and reducing market-related costs

According to Iberdrola, 100% ownership will streamline Neoenergia´s corporate structure and enhance operational flexibility.

In addition, the Brazilian utility will be 100% owned by Equatorial, which will reduce financial requirements for financing and listing maintenance costs, the company said.

Iberdrola also explained that such costs stem from the regulatory, administrative, and reporting duties that companies listed in Brazil must meet.

The offer is also in line with Iberdrola's plans to delist Neoenergia from the São Paulo Stock Exchange's New Market listing segment.

The company said that this was part of a larger strategy to better manage its Brazilian operations.

It also links the initiative directly to the recent acquisition of Previ's stake, which brought Iberdrola's stake to 83.8% and paved the way for moving towards total consolidation.

Reaffirming commitment to Brazil and grid-focused growth

In the release, Iberdrola emphasises how the impending merger strengthens its commitment to Brazil.

The corporation emphasises that its expansion strategy in the country is centred on electrical networks, which account for 90% of Neoenergia's revenue.

This emphasis on regulated network assets is a key component of Iberdrola's strategy in Brazil, where the company sees long-term opportunities for consistent returns and growth.

Neoenergia is one of Brazil's largest electrical companies, with over 40 million customers. It has five distribution firms in Bahia, Rio Grande do Norte, Pernambuco, São Paulo, Mato Grosso do Sul, and Brasília.

The company also manages 18 transmission lines, making it the country's largest power distribution organisation in terms of client base.

Iberdrola cites this vast customer base and infrastructural footprint as significant reasons for strengthening its control over the subsidiary.

In addition to its position in distribution and transmission, Neoenergia is a substantial electricity generator.

The corporation operates four hydroelectric power facilities, 44 wind farms, and two solar parks with a total installed capacity of 3.9 gigawatts.

This diverse generation portfolio adds to Iberdrola's strategic value in consolidating ownership.

With the tender offer now open, Iberdrola sees the move as a natural continuation of recent purchases and a step toward a more streamlined, fully integrated presence in one of its most significant international markets.