AES Bid for CANTV Sends Its Stock Down

AES Corp.’s unsolicited takeover bid for Venezuela’s largest telephone company triggered a backlash from investors, who drove the U.S. power company’s stock down in a show of concern over its move into the troubled telecommunications industry.

AES told shareholders it was not making a strategic shift from its main business of generating power with the $1.37-billion bid announced Wednesday for control of Compania Anonima Nacional Telefonos de Venezuela, better known as CANTV.

Despite the reassurances, AES shares fell $2.94, or 8%, to $32.65 on the NYSE.

Analysts expressed concern over AES extending its investment in Latin America, which already accounts for about 40% of its revenue, as well as the company’s lack of experience in the telecom industry. Meanwhile, rating agency Standard & Poor’s Corp. issued a cautionary note on AES’ debt ratings.

Arlington, Va.-based AES already owns 6.9% of CANTV through its stake in a Venezuelan electricity utility and recently considered selling the holding.