CPFL Energia, Brazil's largest non-state electricity distribution company, agreed late on Tuesday to take over renewable energy company Ersa, as it diversifies into wind power, small hydropower and biomass energy.
Under the terms of the deal, CPFL (CPFE3.SA) will have 63.5 percent of the combined entity, to be named CPFL Energias Renovaveis, the company said in a regulatory filing. Shareholders of Ersa, including buyout firms BTG Pactual, Patria Investimentos and Eton Park, will have the remainder.
The filing did not specify whether the association involved any cash. According to CPFL, both companies agreed to contribute their assets into a new entity that has total capacity of 4,375 megawatts in existing, planned and under development assets.
Private sector distributors are seen to be diversifying to alternative sources of energy amid consolidation efforts and rising government pressure to cut rates.
The combined company is estimated to have about 4.5 billion reais ($2.8 billion) in equity, according to the filing. The deal is subject to the approval of shareholders and regulators.
Shares of CPFL fell on Tuesday for the first time in four days, shedding 1.7 percent to 46.36 reais. CPFL is controlled by construction conglomerate Camargo Correa and pension fund Previ, among other shareholders.
