TotalEnergies is expanding its power business in Europe with a multi-billion all-stock deal to buy 50% of the flexible power generation assets of Czech firm EPH.
The French supermajor on Monday announced a $5.9-billion (5.1 billion euros) all-stock transaction with Energetický a pr?myslový holding, a.s. (EPH) to acquire 50% of its flexible power generation platform in Western Europe. The deal is for gas-fired and biomass power plants, as well as batteries, in Italy, the United Kingdom, Ireland, the Netherlands, and France. These assets in total have an enterprise value of $12.3 billion (10.6 billion euros), or a multiple of 7.6 times the expected earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2026.
Under the agreement, EPH will receive the equivalent of 5.1 billion euros in TotalEnergies shares. 95.4 million TotalEnergies shares will be issued, based on a price equal to the volume-weighted average share price of the twenty trading sessions preceding the signing date November 16. These shares would account for about 4.1% of TotalEnergies’ share capital and make EPH one of the supermajor’s largest shareholders upon completion of the transaction.
The deal will result in the creation of a 50/50 joint venture between TotalEnergies and EPH, which will be responsible for the industrial management of the assets and the business development, while each company will market its share of production under a tolling arrangement with the joint venture.
TotalEnergies says the transaction is fully consistent with its Integrated Power strategy and will strengthen its position in European electricity markets by enhancing the complementary relationship between intermittent renewable power generation and flexible power generation such as gas-fired plants and batteries.
“Given our position as the #1 gas supplier in Europe, this transaction enables us to fully capitalize on gas-to-power integration and create added value for our LNG chain, independently of oil cycles,” TotalEnergies chairman and CEO
Patrick Pouyanné said.
Unlike other European majors such as BP and Shell, which have outright reduced spending on renewables, TotalEnergies has a strategy to reach a 12% profitability target for its Integrated Power business and is expanding it in Europe and the U.S.
By Tsvetana Paraskova for Oilprice.com
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