ENGIE-led consortium’s $8.6 billion competitive bidding process in Brazil for the acquisition of TAG

BMA- Barbosa, Müssnich, Aragão, Stocche Forbes, Jones Day, Schmidt, Valois, Miranda, Ferreira & Agel, Tauil & Chequer (Mayer Brown) and Machado Meyer advised on the deal.

ENGIE announces that the consortium in which it holds a majority stake has won the competitive bidding process conducted by Petrobras for the sale of a 90% shareholding in Transportadora Associada de Gás S.A. (TAG) with a final and binding offer amounting to USD 8.6bn.

TAG is the largest natural gas transmission network owner in Brazil, a priority country within ENGIE’s recently announced strategic framework, with an asset base providing an attractive and stable regulated profit stream to ENGIE. TAG assets consists of 4,500 kilometers of gas pipelines in Brazil, which represents 47% of the country’s entire gas infrastructure.

The winning offer for the 90% equity stake in TAG was made by a consortium composed of ENGIE S.A, ENGIE Brasil Energia1 and la Caisse de dépôt et placement du Québec (CDPQ). Petrobras will maintain a 10% equity stake in TAG.

ENGIE’s net total ownership of TAG (directly and indirectly through Engie Brasil Energia) will amount to 49.3%2. As TAG will be jointly controlled, it will not be consolidated into their balance sheets. Within the TAG acquisition financing structure, a debt/equity ratio of 70/30 is targeted at closing. Given this secured financing structure and ENGIE’s net total ownership percentage, ENGIE expects to have a net debt impact of EUR 1.6bn in conjunction with the transaction.

In addition to its ownership, ENGIE will be the industrial partner for TAG, managing the asset after the closing of the transaction and taking 100% of the operations and maintenance after the third year.

This acquisition is fully aligned with ENGIE’s strategy to be the leader of the zero carbon transition. This transition requires sophisticated large-scale energy infrastructure such as the TAG pipeline network. Natural gas will increasingly contribute to the diversification and decarbonization of Brazil’s energy mix, replacing high carbon energy sources while complementing renewable generation. This acquisition is also in line with ENGIE’s objective to rebalance the geographic and regulatory exposures of its networks activities and to benefit from the steadily growing Brazilian gas market. TAG will provide ENGIE with revenues based on long-term contracts and the opportunity to broaden its local customer portfolio and develop new uses for gas transportation networks stemming from new technologies such as biomethane and green hydrogen. Finally, the financing partnership scheme implemented with CDPQ for this acquisition highlights ENGIE’s commitment to efficient capital allocation.

The transaction is conditional upon the approval of the relevant governance bodies of Petrobras and the Brazilian and European Union anti-trust authorities. The closing is expected before the end of the first semester 2019. The Group will detail further financial impacts of TAG acquisition once closing is achieved.

BMA- Barbosa, Müssnich, Aragão advised advised Engie S.A. with Plínio Barbosa (Picture), Anna Carolina de Oliveira Malta, José Guilherme Berman, Camila Cuschnir, Luis Marcelo Abdalla, Jean Daniel Demattio Jaldin, Geórgia Malafatti and Carolina Marcondes Ferraz Astolfi Pedro.

Stocche Forbes advised Engie S.A. with Frederico Cursino de Moura, Bruno Gandolfo Damico, Renato Souza Coelho, Paulo Casagrande, Guilherme Coelho, Pietro Bianchi e Yves Dutra, Ricardo Freoa, Laercio Munechika, Marina Falcone Chaves, Mariana David and Caio Morais.

Jones Day advised advised Engie S.A. with Marcello Hallake and S. Wade Angus.

Schmidt, Valois, Miranda, Ferreira & Agel advised Engie S.A. with Paulo Valois Pires, Guilherme Schmidt, Anna Paula Barbosa de Carvalho Góes, Manuela Carneiro Dana, Daniela Loureiro, José Eduardo Siqueira, Rodrigo Pinheiro, Lara Lebreiro, Clarissa Prallon, Ana Clara Scofield, Arthur Vasconcellos and Luciana Xavier Cotrim.

Tauil & Chequer (Mayer Brown) advised AGDF International and Engie Brasil Energia S.A. with Alexandre Chequer, Victor Galante, Débora Yanasse, José Paulo Marzagão, Ludmila Arruda Braga, Tiago Macedo, Dicéa Ferraz, Luciana Sodré, Eduarda Nagle, Lívia Seabra V. de Lima, Fernando Issa and Anna Pedroso.

Tauil & Chequer (Mayer Brown) advised Caisse de dépôt et placement du Québec par of the consortium – with Alexandre Chequer, Victor Galante, Débora Yanasse, Guido Vinci, Michel Sancovski, Luís Inácio Lucena Adams, Gustavo Fernandes, José Paulo Marzagão, Ludmila Arruda Braga, Eduardo Molan Gaban, Tiago do Monte Macêdo, Fernanda Albuquerque Junqueira Bastos, Dicéa Ferraz, Luciana Sodré, Maria Eugenia Kanazawa, Eduarda Nagle, Lívia Lima, Luiz Santiago, Francisco Bambozzi Mastropietro, Luis Adams, Gustavo Fernandes, Guilherme Silveira, Fernando Issa and Anna Pedroso.

Machado Meyer advised Petróleo Brasileiro S.A. (Petrobras) with Arthur Bardawil Penteado, Daniel Szyfman, Igor Marcell Ramos Finzi, Luana Komatsu Falkenburger, Bruno Gomes, Patrícia Matsubara, Gisela Ferreira Mation, Ivana Amorim De Coelho Bomfim, Maria Fernanda Soares, Laura Ducati Dabronzo, Anna Carolina Ramos Coelho Joppert, Gabriel Esteves Alves De Carvalho and Raphael Barboza Correia.

Involved fees earner: Luis Marcelo Abdalla – Barbosa, Müssnich & Aragào; Plínio Simões Barbosa – Barbosa, Müssnich & Aragào; José Guilherme Berman – Barbosa, Müssnich & Aragào; Camila Cuschnir – Barbosa, Müssnich & Aragào; Anna Carolina de Oliveira Malta – Barbosa, Müssnich & Aragào; Jean Daniel Demattio Jaldin – Barbosa, Müssnich & Aragào; Geórgia Carolina Malafatti – Barbosa, Müssnich & Aragào; S. Wade Angus – Jones Day; Marcello Hallake – Jones Day; Ivana Amorim De Coelho Bomfim – Machado Meyer Advogados; Raphael Barboza Correia – Machado Meyer Advogados; Arthur Bardawil Penteado – Machado Meyer Advogados; Laura Ducati Dabronzo – Machado Meyer Advogados; Gabriel Esteves Alves De Carvalho – Machado Meyer Advogados; Gisela Ferreira Mation – Machado Meyer Advogados; Igor Finzi – Machado Meyer Advogados; Bruno Gomes – Machado Meyer Advogados; Anna Joppert – Machado Meyer Advogados; Luana Komatsu Falkenburger – Machado Meyer Advogados; Patrícia Matsubara – Machado Meyer Advogados; Maria Fernanda Soares – Machado Meyer Advogados; Daniel Szyfman – Machado Meyer Advogados; Fernanda Albuquerque Junqueira Bastos – Mayer & Brown; Ludmila Arruda Braga – Mayer & Brown; Francisco Bambozzi Mastropietro – Mayer & Brown; Alexandre Chequer – Mayer & Brown; Tiago do Monte Macêdo – Mayer & Brown; Gustavo Fernandes de Andrade – Mayer & Brown; Dicéa Ferraz – Mayer & Brown; Victor Galante – Mayer & Brown; Fernando Issa – Mayer & Brown; Maria Eugenia Kanazawa – Mayer & Brown; Luís Inácio Lucena Adams – Mayer & Brown; José Paulo Marzagão – Mayer & Brown; Eduardo Molan Gaban – Mayer & Brown; Eduarda Nagle Gaulia – Mayer & Brown; Anna Pedroso – Mayer & Brown; Michel Sancovski – Mayer & Brown; Luiz Santiago – Mayer & Brown; Livia Seabra de Lima – Mayer & Brown; Luciana Sodré – Mayer & Brown; Guido Vinci – Mayer & Brown; Débora Yanasse – Mayer & Brown; Anna Paula Barbosa de Carvalho Góes – Schmidt, Valois, Miranda, Ferreira & Agel; Manuela Carneiro Dana – Schmidt, Valois, Miranda, Ferreira & Agel; Lara Clarkson Lebreiro – Schmidt, Valois, Miranda, Ferreira & Agel; Daniela Loureiro – Schmidt, Valois, Miranda, Ferreira & Agel; Paulo Valois Pires – Schmidt, Valois, Miranda, Ferreira & Agel; Rodrigo Pinheiro – Schmidt, Valois, Miranda, Ferreira & Agel; Clarissa Prallon Perez – Schmidt, Valois, Miranda, Ferreira & Agel; Guilherme Schmidt – Schmidt, Valois, Miranda, Ferreira & Agel; Ana Clara Scofield – Schmidt, Valois, Miranda, Ferreira & Agel; José Eduardo Siqueira – Schmidt, Valois, Miranda, Ferreira & Agel; Mariana Batista David – Stocche Forbes Advogados; Pietro Bianchi – Stocche Forbes Advogados; Paulo Casagrande – Stocche Forbes Advogados; Frederico Cursino de Moura – Stocche Forbes Advogados; Yves Dutra – Stocche Forbes Advogados; Bruno Gandolfo Damico – Stocche Forbes Advogados; Guilherme Gaspari Coelho – Stocche Forbes Advogados; Caio Moliterno de Morais – Stocche Forbes Advogados; Laercio Munechika – Stocche Forbes Advogados; Ricardo Peres Freoa – Stocche Forbes Advogados; Marina Rodrigues Falcone – Stocche Forbes Advogados; Renato Souza Coelho – Stocche Forbes Advogados;

Law Firms: Barbosa, Müssnich & Aragào; Jones Day; Machado Meyer Advogados; Mayer & Brown; Schmidt, Valois, Miranda, Ferreira & Agel; Stocche Forbes Advogados;

Clients: Caisse de dépôt et placement du Québec (CDPQ); Engie Brasil Energia S.A.; ENGIE SA; GDF International SA; Petrobras;

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Author: Ambrogio Visconti.