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Petrobras (PBR) Earns $2.3B From BR Distribuidora Stake Sale

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In the largest equity deal in Latin America this year, PetroleoBrasileiro S.A. or Petrobras (PBR - Free Report) recently raised $2.3 billion by selling its remaining interest in Brazil's biggest fuel distributor. According to corporate documents, the company got rid of the entire Petrobras Distribuidora SA (BR Distribuidora) in a deal value of $5.23 per share. The sale is part of the oil giant's broader strategy to divest non-core operations, reduce debt and prioritize deep-water projects.

The divestiture is also part of the government's plan to sell off state-owned assets. The privatization push, which was one of economy minister Paulo Guedes' key promises when he took office in 2019, was put on hold for the greater part of the previous year when the pandemic threw the economy into disarray.

A total of 11.4 billion reais was generated from this recent deal. The investment, which amounted to 436,875,000 voting shares, represented 37.5% of the firm. Per Bloomberg statistics, it has also been one of the top five secondary offers in the country since 1990.

Starting with BR Distribuidora’s initial public offering in 2017, Petrobras initiated the process of divestment from the company. It sold full ownership of this fuel distributor two years later in a public equity offering, raising $2.2 billion and removing government control from the firm.

BR Distribuidora is the leading distributor and marketer of petroleum derivatives and biofuels in Brazil and Latin America. Across the country, the firm has more than 8,000 gas stations and above 1,000 convenience stores. Morgan Stanley, Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., Banco Itau BBA, JPMorgan Chase & Co. and XP Inc. led the BR Distribuidora transaction.

Company Profile

Petrobras is the largest integrated energy firm in Brazil and one of the biggest in Latin America. The company’s activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks. Its operations also include refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons apart from other energy-related operations.

Zacks Rank & Key Picks

Petrobras currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the energy space include Matador Resources Company (MTDR - Free Report) , Baker Hughes Company (BKR - Free Report) and Oasis Petroleum Inc. (OAS - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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