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Three Gorges wins bid for EDP stake

By Richard Fu  (Shanghai Daily)

10:42, December 24, 2011

CHINA Three Gorges Corp has won a bid to buy a 21 percent stake in Portuguese utility EDP for 2.69 billion euros (US$3.5 billion), beating rivals from Germany and Brazil, as the south European nation sells state assets to cut debt.

The acquisition will help the Chinese company, operator of the world's largest hydropower project, to boost its presence in Europe, the United States and Brazil, in line with its "go-out" strategy, Three Gorges Chairman Cao Guangjing said in a statement yesterday.

Three Gorges' bid was a 53.6 percent premium to the market price of EDP-Energias de Portugal SA on Wednesday, said Portugal's state holding company Parpublica. Other bidders included Germany's E.ON AG and Brazil's Centrais Eletricas Brasileiras SA.

Cao said the bidding process was "very intense" as Three Gorges' price was only 5-6 percent higher than those of key rivals.

Under the deal, the total investment in EDP and the Portuguese economy may reach 8 billion euros, taking into account financing by Chinese banks, said Maria Luis Albuquerque, Portugal's treasury secretary.

The Portuguese government is selling stakes in EDP and grid operator REN as part of a 78-billion-euro bailout plan it agreed with the European Union and the International Monetary Fund. The sale of the EDP stake is the first and largest of that privatization plan.

Lisbon-based EDP has a strong presence in alternative energy such as hydro and wind. Its business in Brazil, a fast-growing market, has attracted strong interest from bidders. EDP is also the main shareholder of Macau power utility CEM.

Chinese companies are attracted to Portugal, which has centuries-old links with Brazil and resource-rich Africa. The Sinopec Group has agreed to buy 30 percent in the Brazilian unit of a Portuguese oil firm.

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