Petrobras offering of fuel unit prices at 24.50 reais per share: sources

SAO PAULO (Reuters) - Brazilian state-run oil company Petroleo Brasileiro SA has relinquished control of the country’s biggest fuel distributor in a share offering, pushing ahead with a privatization drive under new Chief Executive Roberto Castello Branco.

A logo of the Brazil's state-run Petrobras oil company is seen in Rio de Janeiro, Brazil March 25, 2019. REUTERS/Sergio Moraes

The offering of Petrobras Distribuidora SA was priced at 24.50 reais per share, according to two sources with knowledge of the matter. Final pricing implied a discount of less than 1% to the closing price of the fuel unit on the Sao Paulo stock exchange on Tuesday.

Petrobras is expected to fully exercise the over-allotment provisions, selling a 33.75% stake and raising 9.63 billion reais ($2.55 billion) with the sale, one of the people added, asking for anonymity to disclose non-public information.

Final results of the over-allotment provisions will be publicized by Aug. 28.

Each of Branco’s three predecessors discussed privatizing Petrobras Distribuidora. The share offering of the gas station chain underscores the new government’s commitment to an array of public asset sales in industries ranging from energy to finance.

The fuel distributor, also known as BR Distribuidora, owns 17.7% of all gas stations in Brazil, according to oil regulatory agency ANP data. Its closest rival is Ipiranga, controlled by Ultrapar Participações SA, with 14% of gas stations.

The sale of state-owned assets is expected to drive mergers, acquisitions and share offerings in Brazil in the second half of the year, bankers and investors said, after a slower-than-expected first half.

Petrobras management, appointed by President Jair Bolsonaro in January, is aggressively exiting downstream and midstream businesses to sharpen its focus on offshore oil exploration and production.

Analysts at UBS AG and Banco Bradesco SA have “buy” and “outperform” ratings on Petrobras Distribuidora, with price targets of 30 and 35 reais, respectively. Both say privatization will free the firm of some onerous legal obligations.

“Personnel costs should fall after privatization,” wrote UBS analysts led by Luiz Carvalho.

The offering was led by the investment banking units of JPMorgan Chase & Co, Citigroup Inc, Itau Unibanco Holding SA, Bank of America Corp, Credit Suisse Group AG and Banco Santander Brasil SA.

Reporting by Tatiana Bautzer and Carolina Mandl; Additional reporting by Paula Laier and Gram Slattery; Editing by Brad Haynes, Sonya Hepinstall and Leslie Adler