Maha Energy AB sells Brazilian subsidiary to PetroRecôncavo for $174.1 million

(WO) — In line with the company’s new strategic positioning, the board of directors of Maha Energy AB approved the divestment of Maha’s Brazilian subsidiary, Maha Brazil, to PetroRecôncavo, one of the major E&P onshore players in Brazil.

The total acquisition consideration is $174.1 million, with a purchase price of $138 million, subject to specific adjustments, plus $36.1 million to be paid upon successful achievement of earnout milestones.

The quota purchase agreement for the sale of the entirety of Maha’s stake in its Brazilian subsidiary was signed on Dec. 27, with its closing subject to customary precedent conditions, including approval by the Brazilian antitrust authority.

The transaction with PetroRecôncavo was considered by the board of directors as advantageous and aligned with the Company’s new portfolio management strategy, and was driven, in part, by the following:

Optimization of the company’s asset portfolio

The transaction will grant the necessary liquidity and cash reserves to enable Maha Energy AB to pursue the optimization of its asset allocation strategy via new investments and acquisition of new assets at attractive entry multiples, with a focus on creating value for its shareholders.

Operational synergies with PetroRecôncavo

While maintaining the regular course of business and operating Maha Brazil’s current portfolio, PetroRecôncavo will be able to generate significant synergies by leveraging its strong presence in the Recôncavo basin.

According to Maha’s CEO, Paulo Thiago Mendonça, “This divestment is a significant step within the Company’s new strategic positioning, continuously focusing on generating value for shareholders. This transaction will enhance Maha’s balance sheet and enable the Company to pursue accretive opportunities in the O&G space at attractive entry multiples, targeting stronger cash-flow streams and profits.”