By Marc Bisbal Arias 
 

Iberdrola SA (IBE.MC) said Tuesday that Neoenergia S/A (NEOE3B.SM) has agreed to subscribe to a capital increase ahead of a potential full takeover of Eletropaulo Metropolitana Electricidade de Sao Paulo S/A (ELPL3.BR) valued at approximately $1.7 billion.

Neoenergia, in a first step, has agreed to buy 67.7 million Eletropaulo shares at a price of 25.51 Brazilian reais ($7.45) each in a primary offering.

Under the deal, Eletropaulo would allot at least 80% of the primary offering to Neoenergia, excluding shares that might be acquired by Eletropaulo's shareholders exercising their subscription rights, the company said. Should other investors offer a higher price than Neoenergia, the company could decide not to subscribe any shares, it said.

After the initial transaction, Neoenergia plans to launch a takeover bid for up to 100% of Eletropaulo.

Iberdrola indirectly holds a majority stake in Neoenergia.

Eletropaulo shares closed Monday at BRL22.

Write to Marc Bisbal Arias at marc.bisbalarias@dowjones.com

(END) Dow Jones Newswires

April 17, 2018 08:27 ET (12:27 GMT)