Photo Gallery An Expensive Brazilian Adventure
An MPX power plant under construction in the Brazilian state of Rio Grande do Norte: When executives at German electrical ultility E.on invested in MPX, they saw Brazil as a growing and energy-hungry country and viewed the stake as a good way of accessing the growing market.
In order to prevent suffering millions or billions in losses from the pitfalls of doing business in a country with often volatile politics, the German company found a partner who seemed like a good fit: MPX majority owner Eike Batista, a billionaire industrialist and Brazilian of German origin.
With his connections, E.on thought it might be smooth sailing with Batista, who is pictured here with Brazilian President Dilma Rousseff. But in recent months, the value of EBX, the holding company for Batista's numerous firms, has plummeted, from $25 billion to $10 billion. Bad speculation is apparently the cause of EBX's woes.
It's a precarious situation for E.on and company CEO Johannes Teyssen. He could either pull out of Brazil and sell the company's MPX shares with as small a loss as possible. He could find other partners in Europe or Brazil to buffer the risks. Or he could buy a larger stake in MPX and go it alone, with all the risks that would entail. Whatever happens, supervisory board members are growing impatient with his strategy.
Teyssen would like to see the Düsseldorf-based company grow in difficult markets like Russia, Turkey and Brazil, where he sees enormous opportunities.
