February 15, 2019 / 4:15 PM / 5 months ago

Exclusive: Portugal government sees Elliott's plan for EDP Brazil as 'unfortunate'

LISBON (Reuters) - Activist investor Elliott’s plan for EDP-Energias de Portugal to sell its Brazilian operations is unfortunate as it would mean leaving a fast-growing market, Portuguese Environment and Energy Transition Minister João Matos Fernandes said on Friday.

FILE PHOTO: The logo of Portuguese utility company EDP - Energias de Portugal is seen at the company's offices in Oviedo, Spain, May 14, 2018. REUTERS/Eloy Alonso/File Photo

Chinese state-owned CTG, which is already EDP’s largest shareholder with a 23 percent stake, launched a 9 billion euro ($10.13 billion) bid for Portugal’s biggest company in May 2018. EDP’s board has rejected the 3.26 euros per share offer as too low.

Elliott, which said it represents a shareholding in EDP of 2.9 percent, proposed on Thursday what it called a “superior” alternative to CTG’s bid, raising 7.6 billion euros from a sale of the utility’s Brazilian operation, Iberian thermal holdings and minority stakes in Spanish and Portuguese networks.

“Without making comments about what (EDP) shareholders do, the idea (of Elliott) to sell Brazil’s operation does not seem a very fortunate on,” Fernandes told Reuters in the Portuguese government’s first comments on Elliott’s proposal.

Brazil, a former Portuguese colony, is a “market with great capacity to grow,” he said.

“EDP is free to make the decisions it wants but selling the Brazil operation does not seem to be important for what EDP represents for the national economy,” he added.

Fernandes added that “the Portuguese government has already said it sees with very good eyes the principles of CTG’s takeover bid for EDP”.

CTG’s bid proposal needs regulatory approval in a number of countries, including Brazil, the United States, Portugal and the European Union.

“The bid strengthens EDP by concentrating in Portugal the headquarters of a set of assets that EDP has around the world,” Fernandes said, declining to comment on the specifics of CTG’s bid.

Portugal’s market regulator has said there are no signs EDP is preparing to abandon CTG’s offer despite the drawn out bid process. At the same time, sources have told Reuters that CTG has halted talks with EU regulators about the proposed bid.

Shares in EDP were down 0.4 percent at 3.24 euros by 1538 GMT.

Reporting By Sergio Goncalves, writing by Catarina Demony, editing by Axel Bugge and Louise Heavens

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