Spain’s Gas Natural to acquire Chile's CGE for $3.3 billion

Spanish gas and energy giant Gas Natural SDG SA has announced it will launch a takeover offer for Chilean electricity distributor Compania General de Electricidad SA.

Under the terms of the agreement, Gas Natural will offer to acquire 100 percent of CGE's stock, taking a minimum initial stake of 51 percent.

The families controlling CGE, the Marin, Almeria and Perez Cruz families, inked an agreement with Gas Natural to sell their combined 54.19 percent stake at 4,700 Chilean pesos ($7.92) per share.

Including debt, Gas Natural said the value of the deal would be about €6 billion, making the transaction its biggest foreign acquisition and the largest purchase of a utility in Latin America.

CGE, which has a market capitalization of around $2 billion, services part of Chile's capital Santiago and distributes about 40 percent of the country's electricity. It also owns a controlling stake in Chilean gas transporter Gasco SA.

Chief Executive Officer Rafael Villaseca said on a conference call for analysts today:

“It’s very material because it represents a significant entry into Chile, one of Latin America’s largest and most stable markets. The acquisition of CGE enables Gas Natural to gain immediate scale in Chile.”

The company generated 30 percent of its €25 billion revenue last year from Latin America. In 2008, the utility bought Union Fenosa SA for about 16.8 billion euros.