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Galp Drops as Investors Agree on Plans for Eni’s Stake Sale

Galp Energia SGPS SA (GALP) fell to the lowest in two months in Lisbon trading after shareholders agreed on a proposal for Italy’s Eni SpA (ENI) to sell a stake, paving the way for an exit from the largest Portuguese oil company.

Galp dropped 3.2 percent to 12.34 euros, the lowest price since Jan. 31. The stock has advanced 8.4 percent this year, valuing Galp at 10.2 billion euros ($13.6 billion).

Eni, one of Galp’s two largest shareholders, agreed to sell a 5 percent stake to Amorim Energia BV for an undisclosed price within 150 days, it said in a statement yesterday. Eni’s 33 percent holding was valued at 3.5 billion euros at yesterday’s close. Amorim, controlled by billionaire Americo Amorim and part-owned by Angola’s Sonangol EP, also holds 33 percent.

Eni Chief Executive Officer Paolo Scaroni said in February he was ready to sell the stake as his company didn’t want to remain a minority investor. The Italian company plans to divest another holding of as much as 18 percent, or 20 percent if convertible bonds are issued. The accord gives Amorim the option to preempt stock sales or choose a buyer, and allows Caixa Geral de Depositos SA to offload its 1 percent as Eni sells.

Under a previous shareholder agreement, which was valid until March 2014, Eni had to get permission for a sale from Amorim and Caixa Geral. Eni last year dropped a plan to sell the stake to Rio de Janeiro-based Petroleo Brasileiro SA. (PETR4)

Earlier Accord Scrapped

“This agreement is positive as it allows Eni to sell its stake in Galp without having to wait until the end of the shareholders’ agreement in 2014,” Dominique Patry, an analyst at Credit Agricole Cheuvreux SA, said today. “Eni will not benefit from any premium related to its controlling stake in the company, as Scaroni originally wanted to achieve.”

Eni advanced 0.9 percent to 17.59 euros in Milan trading, bringing its gain for the year to 9.9 percent.

Galp explores for, produces and refines oil and gas. It has 90 percent of its 2.9 billion barrels of oil reserves in Brazil and plans to invest 1.2 billion euros a year from 2013 to 2016 to expand exploration. In July, Galp raised its 2020 output target after “exceptional” progress in Brazil, forecasting production of more than 300,000 barrels of oil equivalent a day.

Eni, based in Rome, had been discussing selling part of its Galp stake to Sonangol, a person with knowledge of the matter said in March. Eni wasn’t planning to divest all its holding because the Portuguese government doesn’t want the African country to have too much control, the person said, declining to be identified before a deal was reached.

Angola, a former Portuguese colony, became sub-Saharan Africa’s second-largest oil producer following the development of offshore fields in the past 10 years, giving state-controlled producer Sonangol cash to make investments overseas.

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Joao Lima in Lisbon at jlima1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

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