Source Pravda.Ru

Petrobars To Pay $1.1 Billion For Argentine Oil Company

Petrуleo Brasileiro S.A., Brazil's state-controlled oil company, said today that it had agreed to acquire a controlling stake in Perez Companc, the second-largest oil company in Argentina, for about $1.1 billion.

The Brazlian company, known as Petrobras, already owns 700 gasoline stations in Argentina, acquired last year in a swap with Repsol YPF of Spain. Today's deal would add oil exploration, production and refining operations, and expand Petrobras's total production by 12 percent.

The deal calls for Petrobras to pay the family that now controls Perez Companc $754.6 million in cash and $370.5 million in seven-year bonds for 58.6 percent of the company. Analysts expressed concern that Petrobras was adding debt by expanding in Argentina, where a January currency devaluation deepened a recession and caused huge losses for Perez Companc and other companies.

Petrobras's borrowing costs have risen sharply and its stock has fallen because of the 20 percent fall in the value of the Brazilian currency, the real, since March.

Major foreign investment in Argentina all but halted after the country's currency and debt crisis worsened severely in January, but Brazilian companies have begun to look there for bargains. The brewer Cia. de Bebidas das Americassaid in early May that it would buy one-third of Argentina's biggest beer maker, Cerveceria y Malteria Quilmes Saica, for about $700 million.

Today's sale is the latest in a series of retreats by the Perez Companc family, which has sold banks, a phone company and huge tracts of land from Buenos Aires to Argentina's far south. The family is exiting the oil business after 42 years.

Petrobras has been actively seeking acquisitions outside its home market to help Brazil become self-sufficient in oil by 2006.

Petrobras said it had no immediate plans to buy the rest of Perez Companc. American depository receipts of Petrobras fell 8.4 percent, to $14.84 today.

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