Fomento de Construcciones & Contratas SA, a Spanish infrastructure company, agreed to sell its stake in the water and waste-management company Proactiva Medio Ambiente to Veolia Environnement SA.
Barcelona-based FCC is selling its 50 percent stake in Proactiva, which operates in eight Latin American markets including Brazil and Colombia, to the French water company for 150 million euros ($198 million), resulting in a capital gain of 81 million euros, it said today in a statement.
“The sale of 50 percent in Proactiva is the first important step to reach the divestment goals to which we committed in our strategic plan,” FCC Chief Executive Officer Juan Bejar said in the statement.
Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, said the deal was the second-largest M&A transaction in waste and water in Latin America in 10 years. It was also Veolia’s largest acquisition in Latin America since 2000, according to BBVA.
The purchase marks a change from Veolia’s recent strategy of selling assets to lower debt and boost profitability. Chief Executive Officer Antoine Frerot has pledged to focus on “high growth” economies such as China and the Middle East.
The purchase will have a “neutral impact” on Veolia’s 2014 leverage ratio objective and should add to net income from 2014 not counting the price paid for the acquisition, according to the French utility. Proactiva had 2012 adjusted operating cash flow of 95 million euros and net financial debt of 118 million euros.
FCC, which hired BBVA to manage the transaction, said in March it planned 2.2 billion euros of non-strategic asset sales. In May, company officials said they expected to make some asset disposals before the summer.
FCC, which reported a first-quarter net loss of 140.2 million euros compared with profit of 16.6 million euros a year ago, rose as much as 4.1 percent in Madrid trading while Veolia declined as much as 1 percent in Paris.
Veolia already held half of Proactiva, which reported sales of about 540 million euros last year, according to the statement.