China Three Gorges Gets Portugal's Stake in EDP

Discussion in 'China' started by cir, Dec 23, 2011.

  1. cir

    cir Senior Member Senior Member

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    Macau SAR can and should play a more active, indeed proactive role, in helping the Mainland expand into the Portuguese speaking countries and regions.

    DECEMBER 23, 2011
    By WAYNE MA And PATRICIA KOWSMANN

    Portugal's government said on Thursday that China Three Gorges Corp. won the bidding for its 21% stake in EDP-Energias de Portugal SA with an offer of €2.69 billion ($3.51 billion), in the first of a series of sales of state-owned assets under the country's austerity program.

    The deal marks the first time a mainland Chinese firm acquired a significant stake in a southern European company, and may portend other such moves as cash-strapped European governments from Madrid to Athens have been clamoring for Chinese funding to help them finance gaping budget deficits.

    For government-controlled China Three Gorges, which operates the $23-billion Three Gorges dam on the Yangtze River, the transaction opens doors to EDP's renewable energy assets in Brazil, a key emerging power. The Portuguese company is a major power producer there, operating a sizable fleet of hydroelectric plants and supplying more than 2 million customers with energy.

    The investment will help China Three Gorges "showcase its superiority in hydropower, clean energy project construction and power production," Chairman Cao Guangjing said in a statement.

    It also shows how Portugal's centuries-old links with Brazil and Africa are now making the cash-strapped country an attractive investment for Chinese companies, underscoring a shift in world power that has seen emerging economies asserting their might over newly fragile developed countries.

    Portugal is selling its crown jewel assets as part of a €78 billion bailout agreement it entered into with the European Union and the International Monetary Fund. Under the terms of the rescue, Portugal has committed to cut government spending and its budget deficit.

    "The privatization program is not only important because it gives us access to a source of financing," Portugal's Finance Minister Vitor Gaspar said on Thursday. "It also shows that one can diversify such financing sources."

    Portugal's Treasury Secretary Maria Luis Albuquerque said Chinese banks behind China Three Gorges are willing to provide financing to other Portuguese companies.

    The Chinese firm, which outbid German heavyweight E.ON AG and Brazil's Centrais Elétricas Brasileiras SA, has big ambitions but a small international profile for now. Portugal's government expects China Three Gorges to invest over €8 billion in EDP to support its expansion plan. The Chinese company also wants to tap EDP's experienced management team to develop its international businesses.

    As weak Euro-zone economies shed prized assets through ambitious privatization programs to cut debt, Portugal is attracting significant investments from China because of its presence in former colonies that are resurfacing as red-hot markets, rich in natural resources.

    Portugal's Galp Energia SGPS SA, for example, recently closed a $5.19 billion deal to sell a 30% stake in its Brazilian unit to China Petrochemical Corp. Galp need cash for future investments linked to its 10% share in Brazil's largest oil project.

    "Portugal has big attractiveness because it knows Africa and South America well," said Ricardo Salgado, chief executive of Banco Espirito Santo SA, which recently received a $300 million credit facility from China Development Bank Corp. "Portugal is today a platform for investments to those countries," he added.

    Like its domestic peers, Banco Espirito Santo controls a bank in oil-rich Angola, BES Angola. BES and its Chinese counterpart agreed to cooperate in Portuguese-speaking markets, where the Asian giant and its companies are doing an increasing amount of business.

    China bought $57.7 billion in goods from eight Portuguese-speaking markets led by Brazil and Angola from January to September, up 23% from a year ago, according to Chinese government data. Chinese exports to those countries rose 34% in that period to $28.8 billion.

    Following EDP's stake sale, the next asset up for grabs in Portugal is power grid operator Redes Energéticas Nacionais SGPS SA, expected to be sold early next year.

    For Portuguese companies, investments from a deep-pocketed country with a high-growing consumer market are welcome at a time when domestic demand and rising unemployment are hammering profitability. Portugal's economy is expected to contract through 2013.

    In Europe, EDP produces and distributes electricity in Portugal, its largest market, and Spain. It also will provide China Three Gorges with sizeable renewable energy assets in the U.S. with a total capacity of 3,323 megawatts.

    EDP's other shareholders include Spain's power utility Iberdrola SA, which holds 6.8%, Spanish savings bank Cajastur with 5% and Portuguese group José de Mello with 4.8%. The company has a market value of more than €8 billion.

    —Stefani Qi and Liyan Qi in Beijing and David Roman in Madrid contributed to this article.
    Write to Wayne Ma at [email protected] and Patricia Kowsmann at

    China's Three Gorges Wins Auction For Portugal's EDP Stake - WSJ.com
     
    Last edited: Dec 23, 2011
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  3. Ray

    Ray The Chairman Defence Professionals Moderator

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    Portugal is a poor country amongst the EU ones and would be an ideal one to exploit.
     
  4. cir

    cir Senior Member Senior Member

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    China's Yanzhou inks A$700 million deal for Gloucester
    By Narayanan Somasundaram and Alison Leung
    SYDNEY/HONG KONG | Thu Dec 22, 2011 4:03pm EST

    (Reuters) - China's Yanzhou Coal Mining Co Ltd (1171.HK) said on Thursday it plans to merge its Australian unit with Gloucester Coal (GCL.AX) in a A$700 million deal that will create one of Australia's largest listed coal companies.

    Australia's coal sector has seen a series of mergers and acquisitions initiated by Asian suitors hungry to satisfy fast growing domestic demand for coal from steel mills and power generation plants.

    Yanzhou Coal's deal for Gloucester is also yet another case of a Chinese company buying up natural resource assets in Australia, tapping its commodity base to fuel massive residential, commercial and infrastructure projects across China.

    Sydney-based Gloucester will be merged with Yancoal Australia Ltd., and Yanzhou will own 77 percent of the new company. Gloucester shareholders will own the rest and receive A$700 million ($705.36 million) in cash, the equivalent of A$3.20 in per share, Yancoal said in a statement. Each Gloucester Coal shareholder will receive one share in the merged company.

    Gloucester closed at A$7.03 in Sydney on December 19, before trading in the shares was suspended.

    The reverse takeover of Gloucester would give Yanzhou Coal's Australian unit, Yancoal Australia Ltd, a local listing without having to risk an initial public offering in a shaky market, where coal stocks in particular have been pummeled on worries about a global economic downturn.

    A condition of Yancoal's A$3.3 billion takeover of another Australian coal miner, Felix Resources, in 2009 required it to float at least 30 percent of the business on the local exchange by 2012.

    Yanzhou Coal chairman Li Weimin said in a statement the merger plan allows it to meet that requirement and at the same time "reflects the company's strategy to grow our Australia business and to become a global leader in the coal mining sector."

    Gloucester, which has a market value of A$1.4 billion, is 64 percent owned by commodities trader Noble Group (NOBG.SI). Trading in the coal firm's shares were suspended earlier Thursday ahead of the expected offer.

    Yanzhou said the transaction is subject to various approvals, and plans to complete the deal in the second quarter of 2012.

    Yancoal and Gloucester both have mines and projects in New South Wales and Queensland. Gloucester aims to expand production to 10 million tonnes a year by 2016, while Yancoal expects to produce 20 million tonnes a year by 2015.

    That would put a combined group ahead of Whitehaven Coal (WHC.AX), which last week announced a $2.5 billion takeover of Aston Resources (AZT.AX) to create a company producing 25 million tonnes a year by 2016.

    Since taking over Felix Resources, Yancoal has bought Syntech Resources for A$203 million and is about to complete the A$297 million acquisition of Premier Coal from Wesfarmers (WES.AX).

    It sought to buy Whitehaven Coal earlier this year but the two were unable to settle on a price.

    ($1 = 0.9924 Australian dollars)

    (Additional reporting by James Regan and Leonora Walet; Editing by Ed Davies, Alex Richardson and Michael Flaherty)

    4 Aussie companies bagged。 Still way to go for Yancoal
     
  5. redragon

    redragon Regular Member

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    Might be a good way to access Brazilian iron ore, good move
     
  6. redragon

    redragon Regular Member

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    so it was right not to save EU, when EU is closer to bankcrupt, the assets will be cheaper, and they have to sell core assets they didn't want to, Slap on Armand's face...again. :rofl:
     
  7. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    EPD paid out dividends of .059 cents per share last quarter. At that rate it will only take 500 years for China to get its money back. :rofl:
     
    amoy likes this.
  8. amoy

    amoy Senior Member Senior Member

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    isn't this dividend a historical low? or most of earnings are reserved? Look at EDPFY.PK: Summary for ENERGIAS DE PORT SA- Yahoo! Finance it's P/E 7.27 is pretty low (in China Stock Exchange many are traded above 30). So, eying a post-crisis ROI Three Gorges may have picked up a bargain?!
     
  9. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    EDP's business is in Portugal and Brasil, both of which are collapsing. They have a low valuation for a reason. There are plenty more companies I would invest in on a hunch more than this one. Portugal dumped it for a reason too.
     

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