Canada's Brookfield to buy Odebrecht Ambiental: source

Wed Aug 17, 2016 9:28am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Geert De Clercq

PARIS (Reuters) - Canada's Brookfield Asset Management has signed a preliminary contract to buy Brazilian engineering conglomerate Grupo Odebrecht's 70 percent stake in water and sewage group Odebrecht Ambiental, an industry source told Reuters on Wednesday.

The source said the deal was done at an equity value of 5.3 billion real ($1.65 billion), which implies an earnings before interest, tax, depreciation and amortization (EBITDA) multiple of 8.5. Odebrecht S.A. will cash out 3.4 billion real, he added.

Odebrecht Group will retain the right to  develop water concession projects ‎outside Brasil and Brookfield (BAMa.TO: Quote) will re-brand Odebrecht Ambiental, which was named Foz until 2012.

The deal is expected to be completed by the end of the year.

Odebrecht, Latin America's largest engineering group, owns 70 percent of Odebrecht Ambiental, with Brazilian worker compensation and retirement fund FGTS owning the remaining 30 percent. It was not immediately clear whether FGTS would also sell its stake to Brookfield.

The source said that last winter Odebrecht Ambiental chief executive Fernando Santos-Reis had discussed the possibility of selling a stake in his firm with Antoine Frerot, CEO of French group Veolia, (VIE.PA: Quote) as well as with Jean-Louis Chaussade, CEO of smaller rival Suez (SEVI.PA: Quote).

There have also been discussions with Spain's Acciona, (ANA.MC: Quote), with Beijing Water (0371.HK: Quote) and some other companies in Europe and Asia, the source said. Initially, Odebrecht wanted to sell only half of its stake in Odebrecht Ambiental.

Established in 2008, Odebrecht Ambiental is market leader in Latin America, serving more than 18 million people and several large companies in the steel, petrochemical and pulp and paper industries.   Continued...