French oil company, Total SA has signed an agreement with the controlling shareholders of France-based power provider, Direct Energie for the acquisition of a 74.33% stake in the company.
The aggregate acquisition price is estimated to be around €1.4 billion, while the purchase price for each share is set at roughly €42. The oil group stressed that this price is 30% higher than the value of the utility’s closing share price on April 17, 2018.
As Direct Energie’s board has already approved the move, Total will now file a tender offer to France’s Financial Market Authority.
“Through this transaction, Total is actively pursuing its development in electricity and gas generation and distribution in France and Belgium,” said Total CEO, Patrick Pouyanné. “This friendly takeover is part of the Group’s strategy to expand along the entire gas-electricity value chain and to develop low-carbon energies, in line with our ambition to become the responsible energy major,” he added.
The transaction, according to Total, will allow the two companies to combine their client portfolios, which comprise 1.5 million and 2.6 million clients, respectively. Following the merger, Total and Direct Energie will directly own generation capacity of around 2.25 GW, 1.35 GW of which is provided by the latter, comprising 500 MW of renewable energy generation assets and 800 MW of gas-fired plants.
“Given Direct Energie’s project portfolio in this area (a 400 MW gas-fired power plant under construction and a 2 GW pipeline of renewable electricity projects in France), Total Eren in emerging countries and SunPower in the United States, Total aims to have a global capacity of at least 10 GW of installed capacity within five years, either in the form of gas-fired power plants or in the form of renewable electricity capacities,” the French oil giant said in its statement.
Direct Energie is active in the solar and renewable energy sectors via its two units, Neoen and Quadran, the latter of which was acquired in June.
The utility is France’s third largest power provider, after EDF and Engie. The group was created in 2003, at a time when the country’s power market was deregulating its electricity sector and opening up to private companies.
In 2008, it also set up French independent power producer (IPP) Neoen, of which it continues to remain a minority shareholder. Neoen constructed the 300 MW Cestas solar plant in France – Europe’s largest solar installation.
In Australia, Neoen is best known for developing the Hornsdale Power Reserve in South Australia. Most recently, it reached financial close on the Coleambally Solar Farm in NSW, and is set to break ground on Victoria’s Bulgana Green Power Hub project.
Neoen claims to have close to 1 GW of large scale solar PV assets either operational or under construction. It will not be affected by the Total-Direct Energie transaction and will continue to be “totally independent”.
This article was edited and localised by Jonathan Gifford on 19/4/2018. Since initial publication it has been amended twice to reflect that Neoen will remain an independent company after the Total transaction, and that Direct Energie remains a minority shareholder in Neoen.