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Development lender reassessing Tietê deal after Eneva makes new bid

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A little over one hour before the Brazilian Development Bank (BNDES) was scheduled to meet and decide whether to sell its stake in power generation company AES Tietê, rival Eneva sweetened its offer, scrambling the situation.

BNDES had already agreed to accept a rival bid from American giant AES Corp., which would be formalized at the board meeting. The new developments triggered a rally on Tietê's shares, which rose 7.07% Monday on B3.

The discussion, which was expected to finish in a meeting during the early afternoon, ended up continuing after another one was called for 9 pm. By this edition's close, the bank had indicated to the parties it planned to delay the decision until new financial analyses could be conducted on the updated proposals.

Eneva's trump card was to raise the cash portion of the bid and bump the premium on the stock to 17% from 10%, drawing the attention and interest of other investors. Eneva increased the cash share to R$1.99 billion from R$727.9 million for all of Tietê. The remaining portion would feature a share swap valuing the company at R$7.9 billion. Eneva raised the price for the second time - it had valued the company at R$6.6 billion in April. It raised the offer to R$7.54 billion last week and grew even bolder this time.

AES Tietê has a market capitalization of R$6.65 billion. The AES proposal for the BNDES stake values the company at R$6.85 billion. The development lender would immediately pocket R$1.17 billion in exchange for 18.5% of the generation company. BNDES officials will now have to decide whether to make a decision only looking at its stake and the short-term liquidity, or consider the option that also affects the other shareholders of Tietê and the company's fate.

With the cash portion of...

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