Bloomberg News

ERG Rises on $1.1 Billion Deal for GDF Suez Assets: Milan Mover

December 06, 2012

ERG SpA (ERG) surged the most in six months in Milan trading after agreeing to buy wind-energy assets from GDF Suez (GSZ) SA, striking a 859 million-euro ($1.1 billion) deal that makes it Italy’s largest wind-power producer.

The shares rose as much as 7.1 percent, the biggest gain since May 25, and traded up 5.6 percent at 5.90 euros as of 2:54 p.m. local time.

ERG will pay 28.2 million euros for 80 percent of GDF Suez’s IP Maestrale Investments unit, which has 636 megawatts of wind power in Italy and Germany, the Milan-based company said in a statement late yesterday. The enterprise value of the transaction, including debt and equity, is 859 million euros.

“It is a good price because on average I’m evaluating the ERG Italian assets at 1.5 million euros per megawatt,” said Claudia Introvigne, an analyst at Kepler Capital Markets in Milan who recommends buying the stock.

As well as becoming Italy’s largest wind-power producer, ERG is gaining entry to the German market at a time when Chancellor Angela Merkel’s government is promoting renewable energy to help fill a gap left by nuclear-plant shutdowns.

The GDF Suez wind farms are funded through so-called non- recourse project finance, whereby the lender can recoup payments from the ventures’ profits. The debt, provided by Italian and international banks, matures in December 2022, according to ERG.

The assets in Italy include 161 megawatts in Sicily, 111 megawatts in Sardinia and 95 megawatts in Campania, as well as projects in Basilicata, Puglia and Molise. The 86 megawatts in Germany are in central and northern regions.

The transaction, which leaves GDF Suez with the remaining 20 percent of shares, will help the Paris-based utility reduce net debt by 800 million euros, it said in a separate statement.

The agreement, subject to approval, includes a put and call option on GDF Suez’s 20 percent equity, exercisable from three years after deal completion, which is expected early next year.

To contact the reporter responsible for this story: Sally Bakewell in London at Sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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