Engie, CDPQ to acquire stake in Brazilian pipeline operator TAG for $8.6bn
TAG is the largest natural gas transmission network owner in Brazil, a priority country within Engie’s recently announced strategic framework, with an asset base providing an attractive and stable regulated profit stream to Engie. TAG assets consists of 4,500 kilometers of gas pipelines in Brazil, which represents 47% of the country’s entire gas infrastructure.
The winning offer for the 90% equity stake in TAG was made by a consortium composed of Engie S.A, Engie Brasil Energia1 and la Caisse de dépôt et placement du Québec (CDPQ). Petrobras will maintain a 10% equity stake in TAG.
Engie’s net total ownership of TAG (directly and indirectly through Engie Brasil Energia) will amount to 49.3%2. As TAG will be jointly controlled, it will not be consolidated into their balance sheets. Within the TAG acquisition financing structure, a debt/equity ratio of 70/30 is targeted at closing. Given this secured financing structure and Engie’s net total ownership percentage, Engie expects to have a net debt impact of EUR 1.6bn in conjunction with the transaction.
In addition to its ownership, Engie will be the industrial partner for TAG, managing the asset after the closing of the transaction and taking 100% of the operations and maintenance after the third year. ■