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The AES Corporation (AES - Analyst Report) has entered into an agreement with VS Energy International to sell two of its power distribution businesses in Ukraine. Subject to local regulatory approval, the transaction is expected to close by mid 2013.

The company will sell its 89.12% and 84.56% equity interest in AES Kyivoblenergo and AES Rivneoblenergo, respectively. AES Kyivoblenergo provides services to 881,000 customers in the Kiev region and AES Rivneoblenergo serves 412,000 customers in the Rivne region.

However, post-transaction, both the businesses will continue their operations and keep supplying energy to customers.

The primary motive of the company behind divesting its businesses is to simplify and strengthen its structure. The company hopes to focus on markets where it has a compelling competitive advantage or untapped opportunities. In June last year, the company sold its 34.5 MW St. Patrick wind farm and its minority share of InnoVent SAS for approximately $42 million to Boralex Europe S.A.

In fact, in Nov 2012, the company had announced its intention to restructure its corporate support and subsidiary business operations. It expects this restructuring to bring in an additional $45 million of recurring cost savings. It expects one-time restructuring expenses to be approximately $20 million from 2012 through 2013.

These plans implemented across the company’s service territories are intended to minimize overhead costs. The divestitures too will allow the company to have sufficient cash to invest in other productive projects.

Currently, AES Corporation has business exposure to 27 countries around the globe, which insulates it from any region-specific risk. With a base of fossil fuel plants, the company is predominantly involved in long-term contracts, which do not allow for any rate base growth in the near term for its regulated utilities. Besides its restructuring plans and initiatives the company is committed to deliver a competitive total shareholder return. The company presently retains a short-term Zacks Rank #2 (Buy).

On Feb 27, 2013, the company is expected to release its fourth quarter and full year 2012 results. The Zacks Consensus Estimates for the fourth quarter and full year 2012 are currently at 31 cents per share and $1.22 per share, respectively.

Other Zacks Rank #1 stocks to consider are Ameren Corporation (AEE - Analyst Report), Pike Electric Corporation (PIKE - Snapshot Report) and TransAlta Corp. (TAC - Snapshot Report).

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