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After Talking to the Advisors of the Opposition Parties in the Presidential Election, Bradesco BBI Is Forecasting a New Future for Petrobras. The Acquisition of Vibra Energia and a Merger with Eletrobras Are Some of the Raised Points.
In election times and amid an increasingly unstable scenario regarding the future of Brazilian presidential management, Petrobras’s direction is also uncertain. Analysts at Bradesco BBI have significant projections about the future transactions of the oil company in the national market. Among them is a possible merger with the newly privatized Eletrobras and the acquisition of Vibra Energia, a likely scenario for one side of the electoral race.
Opposition in the Presidential Electoral Race Predicts Acquisition of Vibra Energia and Merger of Petrobras with Eletrobras for the Future of the State-Owned Company
The Brazilian fuels and energy market is now witnessing a struggle among the parties in the presidential race for the best future proposals for state companies, including Petrobras.
After a conversation with the advisors of the electoral opposition competing in the elections, analysts Vicente Falanga and Gustavo Sadka, who authored the Bradesco BBI report, brought forth the proposals of one side.
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They include the resumption of the administration of Vibra Energia, which will be acquired by the state company in a favorable scenario, and a possible merger with Eletrobras, which recently underwent the privatization process.
“In this scenario, we assume a leveraged acquisition of all common shares of Eletrobras for US$ 34 billion, according to the poison pill rules, and investments in offshore wind farms for US$ 15 billion. We also assume a leveraged acquisition of Vibra for US$ 6.8 billion, according to the poison pill rules,” the specialists commented.
Although it seems like a good scenario for Petrobras’s growth in the national fuels market, the analysts see a scenario that is not favorable to the shareholders of the oil and natural gas company.
This is because, according to Bradesco BBI’s surveys, the state-owned company would need to leverage to buy Vibra Energia and Eletrobras, with the company’s net debt growing to nearly US$ 70 billion by the end of four years, up from the current US$ 42 billion.
Election: Bradesco BBI Still Sees a Favorable and Resilient Scenario for the State-Owned Company’s Shareholders Over the Next Presidential Term in Brazil
Although they analyzed a problem regarding the possible transactions of the state-owned company in the national market in the future, analysts Vicente Falanga and Gustavo Sadka still see a resilient scenario for these businesses during the next 4 years.
Before analyzing this scenario, which they call 3.0, the specialists saw a projection of constant decline in Petrobras’s future, even assuming fuel prices below parity and the resumption of some refining projects.
Furthermore, analysts at Bradesco BBI believe there is a 50% chance of this scenario materializing under a new Brazilian government, leading them to anticipate a correction in the shares in the short term to US$11 per ADR.
Another point highlighted for the future of the state-owned company in the national fuels market, in the scenario of acquiring Vibra Energia and merging with Eletrobras, was the company’s effort for energy transition.
They believe that these efforts are far from being competitive advantages for the company in the national energy sector, but they maintain their recommendations for purchasing shares in the company.
This is because there is still a prosperous growth future for Petrobras; it is just necessary to have a government plan invested in making this happen.
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