The Royal Bank of Scotland will spend $1.35 billion to take a majority stake in a commodity trading joint venture with U.S. Sempra Energy , the two companies said on Monday.
The deal will allow enable Sempra's trading arm, already one of the most active traders in North American and London commodities and energy, to move more quickly into international markets. The statements confirmed what a source close to the matter told Reuters last month.
The new joint venture, to be called RBS Sempra Commodities LLP, will also free up more than $1 billion in cash at Sempra, which will launch a $1.5 billion to $2 billion stock buyback upon the closing of the deal. RBS said the deal would have a negligible effect on its capital ratios and would be immediately accretive to its earnings per share.
Sempra also raised its annual dividend $1.40 from $1.24 and said it would maintain a targeted payout ratio of 35 to 40 percent of net income. However, the company cut its 2008 earnings forecast to between $3.65 to $3.85 per share from its previous estimate of $3.85 to $4.05.