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Shedding Brazilian Assets Puts Duke Energy in a Stronger Position

Duke is divesting its noncore international portfolio and transitioning to a fully regulated utility.


 Duke Energy (DUK) has disclosed plans to sell its Brazilian generation assets to China Three Gorges for $1.2 billion in enterprise value, and we are reaffirming our $84 per share fair value estimate and narrow economic moat rating.

The sale of Duke's 2.1 gigawatt Brazilian generation fleet is in line with our $2.3 billion enterprise value for Duke's international segment, which includes 2.3 GW of additional generation facilities in Chile and Peru. We expect management to announce plans for the rest of Duke's international fleet by year-end, and we continue to see strong strategic rationale for divesting the noncore, no-moat assets, which have no long-term competitive advantages as a result of their exposure to commodity markets. After divesting its international portfolio, Duke will have completed its transition to a fully regulated utility.

Andrew Bischof does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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