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UPDATE 2-Brazilian billionaire Batista in talks to sell stake in MPX
March 19, 2013 / 10:35 PM / 5 years ago

UPDATE 2-Brazilian billionaire Batista in talks to sell stake in MPX

* Eike Batista is rapidly downsizing empire amid rout

* Germany’s E.ON seen as potential buyer of MPX stake

By Guillermo Parra-Bernal and Sabrina Lorenzi

SAO PAULO/RIO DE JANEIRO, March 19 (Reuters) - Billionaire Eike Batista, Brazil’s richest man just a few months ago, is in talks to sell a stake in power company MPX Energia SA as crumbling confidence and project delays have cut the value of his fortune almost $20 billion in the past year.

Batista, who has a 53.9 percent stake in the Rio de Janeiro-based company, “is mulling the divestiture of a certain number of shares of MPX that he owns,” according to a securities filing on Tuesday. The filing, which named no potential investors in MPX, said there is no binding agreement on the sale yet.

Batista is downsizing his Grupo EBX conglomerate of energy, oil, mining and logistics companies after a series of setbacks led some of the group’s listed companies to lose an average 70 percent of their value over the past year. Earlier this month, he turned to BTG Pactual Group, Brazil’s largest independent investment bank, to spearhead a turnaround of his businesses and provide much-needed funding.

“We think that MPX gains by distancing itself from EBX,” JPMorgan Securities analysts led by Gabriel Salas said in a client note on Tuesday. “Although the market may be initially disappointed for the absence of a tag-along offer to minority shareholders, in the longer run the company would gain by having a more financially stable controlling shareholder.”

Recent media reports have suggested Germany’s E.ON SE as the main candidate to purchase half of Batista’s stake in MPX Energia. E.ON, which currently owns 11.7 percent of MPX, could with the deal increase its total ownership of MPX to 38.65 percent, Valor Econômico newspaper reported last week, without citing sources.

Shares of MPX tumbled 4 percent on Tuesday to 10.32 reais. The stock has shed 7.4 percent of its value this year, on top of last year’s 13 percent drop.

A stake sale in the coming days makes sense since MPX’s first batch of assets should reach commercial operations in the next few weeks, JPMorgan’s Salas noted, adding that such fact will make the company’s portfolio much more attractive than development projects.

Fresh capital is seen as key to help MPX carry out planned capital expenditures of about 600 million reais ($306.3 million) this year, to complete electricity generation plants as it shifts from start-up mode to a fully operating power company.

E.ON sees Batista as a partner in Brazil, Chief Financial Officer Marcus Schenck said last week, adding that the company’s strategy is not to buy majority stakes. E.ON, which owns about 50 percent of MPX’s future production pipeline, declined to comment on a potential bid for the MPX stake.

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