When you're following the market for your online stock trading, you would see mergers and acquisitions. These are important phenomena of the market since they can help debt-plagued companies with low stock value to recoup. With more than a single potential buyer around, and quality ones at that, you can expect the company to see good times ahead.
Brazilian petroleum company PetroleoBrasileiro (Petrobras - $PBR) is reported to have found buyers for Petrobras Distribuidora (BR), its fuel distribution subsidiary that has been struggling with debt and the resultant low stock price. A new joint venture called Itausa containing leading bankers of South America along with Brazil's largest lender are reported to be preparing the bid amounting to around $6 billion. There are other potential bidders too, such as GP Investment, Advent International and the Vitol Group. Petrobras runs more than 7,500 gas stations in Brazil and carries out fuel distribution all over the nation.
This deal, if successful, would give the buyers a 51% share of controlling interest of Petrobras. It would give the company a much needed respite from the high pressure situation it is in. At $124, its debt is the largest running in the oil sector. This debt has caused its stock price to keep declining. The recent rise in oil prices has only managed to give it minor gains, unlike other oil companies.
The company has also suffered due to alleged corruption by its former directors, as part of which they looted an estimated $13 billion. But now a recovery plan is in place that involves reducing fresh investment and improving the price transparency. These aggressive measures should enable Petrobras to benefit from a forecasted recovery in the oil market.
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