Eni SpA (ENI) will sell a 30 percent stake of gas-network operator Snam SpA (SRG) to a state-owned bank for 3.5 billion euros ($4.34 billion), part of government efforts to increase competition in the energy industry.
Cassa Depositi e Prestiti SpA will pay Rome-based Eni 3.47 euros a share, a 3 percent premium to Snam’s average market price over the last month, the state-controlled lender said in a statement today.
Prime Minister Mario Monti, attempting to boost economic growth in the face of Europe’s debt crisis, forced the sale to improve access to Italy’s gas-pipeline network and cut energy costs. European Union regulators have accused Eni of distorting natural-gas flows. Eni, the country’s largest oil company, said it will use the cash to reduce debt and invest in exploration and production projects.
The sale will be “positive” for shareholders as Eni “will be a stronger company that is today,” Chief Executive Officer Paolo Scaroni told analysts on a conference call today. The company has had expressions of interest from buyers for its remaining 20 percent holding in Snam, he said. “We are not in the business of being minority shareholders.”
CDP will pay Eni in three installments, with half transferred as soon as competition authorities approve the deal. A further 25 percent will be paid by Dec. 31, with the remaining amount turned over by May 2013. CDP said it will raise 2 billion euros selling bonds to finance the purchase.
The sale won’t incur any significant tax liability on the sale to EDP, the company said.
Scaroni also said Eni plans a new buyback program of 326 million shares, which investors will discuss and vote on at a July meeting.
Eni is unlikely to sell its remaining Snam shares to a single strategic buyer, Scaroni said. He decline to give a timetable for disposing of the rest of Eni’s stake. A sale of some shares to retail investors in Italy is possible, he said.
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