Grupo Energia Bogota, Enel Americas strike mega-deal to create Enel Colombia

Colombian power and gas company Grupo Energia Bogota (GEB) announced that it has reached an agreement with Chile-based group Enel Americas SA (NYSE:ENIA) to create Enel Colombia, with plans to turn the new company into a major Central American vertically integrated utility and renewable energy giant.

The two parties are significant shareholders in Emgesa SA ESP, a power generation and retail business, and Codensa SA ESP, a power distributor and retailer, both Colombian subsidiaries of Enel Americas.

Under the proposed merger agreement, Emgesa would take over and absorb Codensa and two other Enel Americas subsidiaries -- its renewables business Enel Green Power Colombia SAS and Chilean entity Essa2 SpA, which holds Enel Green Power’s assets in Panama, Costa Rica and Guatemala.

GEB said it would take a 42.515% stake in Enel Colombia, the resulting entity, while Enel Americas would control the new company with a 57.345% stake. The remaining 0.140% would be held by minority shareholders. The shareholding structure will be similar to that of Emgesa and Codensa at present.

Enel Colombia is expected to earn COP 2.67 trillion (USD 706.05m/EUR 591.13m) in net profit in 2025, or 25.1% more than what Emgesa and Codensa combined currently post, according to GEB's notice to its shareholders.

The new entity would be greener and more stable, with an additional equity value of around COP 5.5 trillion in renewable energy assets, GEB added.

At present, the power generation companies involved in the merger operate 4,182 MW of combined installed capacity, which is spread across thermal power, hydroelectric and solar plants in four countries. Emgesa alone operates 3,097 MW of hydro and 409 MW of thermal power and sells about 15,300 GWh of electricity per year in Colombia.

With additional solar and wind power projects in development in Colombia and Panama, the new Emgesa, as Enel Colombia, would eventually run 5,470 MW of conventional and green energy in total. On top of this, Codensa would contribute over 3.5 million of its clients, over 1,300 kilometres of power lines, more than 160 substations and a market share of 23% in Colombia.

The merger is subject to shareholders in all companies approving the proposal and other conditions. GEB scheduled its shareholders’ meeting for June 28.

(COP 1,000 = USD 0.264/EUR 0.221)

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