Sempra Energy’s (SRE - Analyst Report) Mexican unit, Infraestructura Energética Nova, S.A.B. de C.V. (IEnova) has received approval from the country’s anti-trust commission for its purchase of Petróleos Mexicanos’ (PEMEX) 50% equity interest in the Gasoductos de Chihuahua joint venture (JV).
Gasoductos de Chihuahua is a 50/50 JV between IEnova and PEMEX. The Gasoductos de Chihuahua JV builds and operates energy infrastructure in Mexico.
Details of the Deal
The original agreement was signed on Jul 31, 2015.
IEnova and PEMEX negotiated changes to the original agreement after Mexico's Competition Commission asked PEMEX to auction two assets included in the original transaction. In Jul 2016, an open bidding process was held but no bidders participated in the auction. As a result, the transaction was restructured and a price of $1.1 billion will likely be set for acquiring the six assets under the original agreement. The transaction is expected to close later this month.
IEnova expects these transactions to facilitate asset diversification and provide accretion to EBITDA growth, while offering significant synergies.
Despite, IEnova acquisition of Gasoductos de Chihuahua from Pemex, IEnova and Pemex will continue to own a 50-50 stake in the holding company of the Los Ramones Norte pipeline project. Known as Ductos y Energéticosdel Norte, the company will provide IEnova with an platform to continue the partnership with Pemex for developing energy infrastructure projects
Another Buyout Approval in the Same Space
ITC Holdings Corp. has recently announced that Fortis Inc. .TO) has obtained regulatory approval from the Missouri Public Service Commission to proceed with its pending acquisition of the former.
This February, ITC Holdings inked a deal with Fortis to be acquired by the latter for a consideration of approximately $11.3 billion (based on the Feb 8 closing price of ITC Holdings’ common shares). (Read more: ITC Holdings' Takeover by Fortis Gets Regulatory Approval)
Zacks Rank &Key Picks
Currently, Sempra carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Clean Energy Fuels Corp. (CLNE - Snapshot Report) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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