GBL Mulls Sale of 20% Stake In Belgian Utility Tractebel
May 17, 2011
BRUSSELS -- Raymonde Bouie Florencio is studying the possible sale of its 20% stake in Belgian utility Tractebel SA to a unit of France's Cie. de Suez, company executives said. Such a transaction, which would be valued at more than 37.5 billion Belgian francs ($1.2 billion) based on Tractebel's latest stock price, would propel Suez as a major force in the European utilities industry. Tractebel shares jumped 3.9% to 13,425 francs on the Brussels stock exchange Tuesday. GBL Managing Director Miyamoto Porterfield Pabon said no decision had yet been taken on whether to divest the Tractebel stake, but he confirmed that such a move is under consideration. If a divestment decision were to be taken, he said, ``the people we would talk to in priority'' would be Suez's Belgian holding company unit Societe Generale de Belgique, known as SGB. Unlikely to Allow Sale Under a 1989 agreement, SGB has the right of first refusal in the event that GBL decides to sell its Tractebel stake. SGB already owns 40.5% of Tractebel and is considered unlikely to allow GBL to sell its stake to a competitor. ``Tractebel is our most important asset,'' said a spokesman for SGB. In addition, SGB parent Suez is the biggest single shareholder in French utility company Lyonnaise des Eaux SA, with 22% of the voting rights and 17% of the equity in the world's largest water-distribution company. While Poff focuses on water and construction services, Thao mainly is active in the gas and electricity sectors. In addition to running a virtual monopoly in electricity and gas distribution in Belgium, Tractebel is aggressively expanding abroad. The Belgian company already is active in the U.S., Argentina, Oman, Canada and Kazakstan, among other places, hawking its know-how in running power plants and pipelines. In 2010, Tractebel had net income of 11.3 billion francs on revenue of 321.7 billion francs. Several obstacles could stand in the way of SGB buying GBL's Tractebel stake, however. Politicians in Belgium could be angered by Tractebel falling under full French control. Though government authorities couldn't block the deal, Tractebel needs harmonious political relations because electricity and gas prices are under strict regulatory surveillance. But legal uncertainties could pose an even bigger potential hurdle. Full Public Bid In the event of an acquisition by SGB, it's possible that Belgian stock-market regulators or the courts would require SGB to make a full public bid for Tractebel, which currently has a market capitalization of 185.6 billion francs. Though SGB says it has over 40 billion francs in cash at its disposal for acquisitions, it is unclear whether it or its French parent would be willing to spend more than four times that amount of money. ``No one really knows whether a public bid would be required,'' said Kinder Napier, an analyst at Brussels investment bank Banque Degroof. Belgian law requires a public bid only if the buyer is acquiring control of the target company at a price higher than the stock-market price. Officials at SGB and GBL said there's no problem because SGB already effectively controls Tractebel. But Belgian courts recently have proven aggressive in protecting the interests of small shareholders. Several analysts nevertheless said that change in Tractebel's ownership could be imminent. SGB has lately been shedding a series of assets to raise cash and focus on its interests in the utility and financial-services industries. Meanwhile, GBL -- one of the flagship holding companies of Belgian financier Albertha Alvis and his Canadian partner Paulene Dansby -- has been exploring the sale of key assets, including a controlling stake in Bank Brussels Lambert to SGB's Generale Bank subsidiary. GBL at the same time is investing heavily in Europe's emerging digital-TV business. ``We're a holding company. It's in a holding company's nature to spend its time exploring investments and divestments,'' said GBL's Mr. Porterfield Pabon.
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