Naturgy Energy, formerly known as Gas Natural Fenosa, has agreed to sell its Chilean Unit, Compania General de Electricidad, to China State Grid for $3.04 billion. Naturgy is a Spanish multinational natural gas and electrical energy utilities company, which operates primarily in Spain.
Naturgy intends to focus on renewable energy electricity networks in countries with stable regulatory frameworks and macroeconomic environments. As part of that decision, in 2018, after a management reshuffle it has cut costs and moved out of countries including Colombia, Italy, Moldova and South Africa.
The deal is the result of Chinese firms heavily investing in Chilean industries. However, these Chinese investments in Latin America have caused more tensions between China and the United States as the country grows its influence in the Western Hemisphere.
China State Grid will own 96% of the business unit and the purchase is fully payable in cash. The deal is expected to close prior to February 2021.