Brazil’s Classico, AGC in talks

SAO PAULO: AGC Energia SA is in advanced talks to sell the 20.1 percent voting stake it holds in Cia Energética de Minas Gerais SA to investment bank Banco Classico SA, which could in turn be invited to share control of Brazil’s No. 3 power utility, two people with knowledge of the matter said on Friday.

According to one of the people, AGC Energia could fetch around 1.4 billion reais ($453 million) with the sale, which is expected to take place in coming weeks. In a surprise move announced late on Thursday, AGC Energia decided to break off Cemig’s shareholder accord, without detailing why.

Such a sale price would represent a premium of almost 100 percent over the value of Cemig’s common shares (CMIG3.SA), which fell 2.7 percent to close at 8.29 reais in São Paulo. Trading volume on the stock hit the highest level since May on the news.

For almost 15 years, AGC Energia and the state of Minas Gerais, which owns a 51 percent voting stake in Cemig, were tied to an accord that gave the former autonomy to decide strategy. The relation soured after Minas Gerais Governor Fernando Pimentel came to power in 2015 and sought to turn around Cemig, which had grown too big, too fast over the previous decade. —