BG-Shell Consortium Wins Control of Brazil's Biggest Gas Distribution Company

Strategic Insights -

An international consortium led by BG plc and Shell has secured a controlling 52.7 percent interest in Comgas, Brazil's largest gas distribution company. The BG-Shell group outbid three other consortia with a proposal worth $988 million, meeting the minimum bid price set by the state-owned power generation utility, Companhia Energetica Sao Paulo (CESP). The acquisition marks the completion of a process initiated in January 1997, when Shell acquired about 20 percent of Comgas. The BG-Shell consortium's successful bid raises Shell's stake in the company to approximately 25 percent.

Key Takeaways:

  • BG plc and Shell led an international consortium that won a controlling 52.7 percent interest in Comgas, Brazil's largest gas distribution company.
  • The consortium outbid three other consortia with a proposal worth $988 million, exceeding the minimum bid price of $450 million set by CESP.
  • The acquisition raises Shell's stake in Comgas to approximately 25 percent, building on the company's initial 20 percent acquisition in January 1997.
  • BG said the acquisition complements the company's gas interests in the region, including recently discovered gas reserves in Bolivia.
  • Comgas will provide a market outlet for the Bolivia-Brazil gas pipeline project through its 30-year franchise serving the industrial heartland of Brazil.
  • The consortium aims to establish Comgas as a linchpin in their efforts to lead the integrated development and supply of gas and electricity markets in South America.

Statistics:

  • The BG-Shell consortium won a controlling 52.7 percent interest in Comgas.
  • The consortium's bid of $988 million exceeded the minimum bid price of $450 million set by CESP.
  • Shell acquired approximately 25 percent of Comgas, building on the company's initial 20 percent interest acquired in January 1997.
  • Comgas has a 30-year franchise serving a population of 24 million people in the State of Sao Paulo.
  • BG holds a 95 percent stake in the BG-Shell consortium, with Shell retaining a 5 percent interest.

Sources:

  • "BG-Shell consortium wins control of Brazil's biggest gas distribution company" (Source: The Financial Times)