March 29, 2019 / 12:27 PM / 6 months ago

Brazil's Petrobras restricts rivals in sale of LPG gas unit

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

RIO DE JANEIRO (Reuters) - Brazil’s state-run oil company Petroleo Brasileiro SA said on Friday it had kicked off a second attempt to sell its liquefied petroleum gas (LPG) distribution unit and restricted local rivals in a potential deal to avoid blocking by antitrust authorities.

Petrobras said in a filing it had begun the sale process for Liquigas Distribuidora SA.

In February, Reuters reported that Petrobras had hired the investment banking unit of Banco Santander Brasil SA to revive the sale.

Petrobras’ management has made asset sales the core element of its bid to pay down debt and re-focus on exploration and production. Next week, the company is due to receive final bids for its TAG pipeline unit, which is expected to fetch several billions dollars.

Petrobras had agreed in 2016 to sell Liquigas Distribuidora to local rival Ultrapar Participacoes SA in a 2.8 billion-real ($720 million) deal, that was later blocked by Brazil’s antitrust watchdog Cade in February 2018.

Petrobras restricted the participation of rivals with more than 10 percent of market share in the Brazilian LPG distribution market, according to documents filed on Friday.

Companies in such conditions may only participate in a consortium, and may not individually have a stake higher than 40 percent of the unit revenue.

Financial investors, the main target of the new process due to antitrust concerns, need to have at least $1 billion in assets under management.

According to Petrobras, Liquigas Distribuidora operates in 25 of 26 Brazilian states, with 23 operating centers and 4,800 authorized re-sellers.

Reporting by Tatiana Bautzer and Gram Slattery; editing by Chizu Nomiyama and David Gregorio

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