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State Grid to buy assets in Brazil for USD1 bln

May. 30, 2012 (China Knowledge) - State Grid Corp of China, the nation's largest power supplier, yesterday said it had agreed to acquire seven high-voltage electricity transmission assets in Brazil from Spain’s Actividades de Construccion y Servicios S.A. and its subsidiaries for BRL 1.86 billion or approximately US$1 billion, including debt. This is the second acquisition by the buyer in Brazil and the fourth major one overseas.

The target power transmission assets are across eight states in Brazil and have a total length of about 2,792 kilometers. Most of the assets are under operation, while the remainder would start commercial operation by the end of this year.

The acquisition, which will be State Grid's second investment in Brazil, is still subject to regulatory approvals from China and Brazil, and will likely be completed in the fourth quarter of 2012, said a person familiar with the matter.

The seller's Chairman, Florentino Perez, who is also the president of Spain’s famous soccer club Real Madrid CF, has to unload several prize assets to reduce debts piled up during the booming property market in Spain together with abundant liquidity five years ago. In the face of tightening credits and sluggish economy, it had over the years reduced its debt level by half, at USD 11.70 billion, by selling its assets.

Bank of America Merrill Lynch is the financial advisor to State Grid, and Mediobanca will act for the seller Spain-based Actividades de Construccion y Servicios S.A.

In January, State Grid announced plans to buy a 25% stake of Portugal's national power grid company Redes Energéticas Nacionais.

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