Mitsubishi consortium to acquire Dutch utility Eneco

Publicly-owned power company Eneco has explored the possibility of an IPO since early 2017 and now appears set to pass into new ownership.

Dutch sustainable energy utility Eneco is set to change hands with Mitsubishi Corporation and Japanese utility Chubu Electric Power Co Inc having placed an all-cash binding offer to buy all the shares of the company.

The power company is currently owned by 44 municipalities in the Netherlands regions of Rotterdam, The Hague, Dordrecht, Lansingerland, Capelle aan den IJssel, Molenlanden, Heemstede and Achtkarspelen but private ownership has been mooted since the start of the year.

Mitsubishi and Chubu will pay €4.1 billion for the Dutch company with Mitsubishi footing 80% of the bill and Chubu supplying the balance. Eneco’s shareholder committee negotiated the 44 municipalities will receive their regular dividend for this year in the second quarter.

The committee had mulled offers from several corporations including Anglo-Dutch oil and gas major Shell before agreeing to accept the Japanese deal, which is subject to approval from the shareholder municipalities.

Unbundled

Eneco split into network company Stedin Holding NV and generation and supply business Eneco Groep NV, as required by European unbundling laws, in February 2017. That prompted the municipalities to prepare to sell their stakes and in January, Shell and Dutch pension fund PGGM announced their interest in acquiring the utility, with Eneco since February mulling all the offers submitted.

A statement issued by the company said around 95% of shareholders had expressed an interest in selling up. The deal proposed concerns acquisition of all the shares in issue but the agreement of the holders of 75% of the stock is sufficient to drive through a full sale and Eneco’s works council has backed the proposed deal.

The shareholders now have 40 days after receipt of a formal offer document to consider whether to close the deal and the period can be extended by 20 days if the 75% threshold is not reached within that time. Under the terms of the acquisition, Eneco will remain based in Rotterdam and no changes will be made to the workforce.

“Our partner for several years, Mitsubishi Corporation will now become our largest shareholder,” said Eneco chief executive Ruud Sondag. “And, equally important: Eneco will remain intact as an integrated and independent Dutch energy company. We will receive ample opportunities for expansion both inside and outside Europe.”

Credit boost

The BBB+ credit rating assigned the company by the Standard & Poor’s agency could get a lift with the arrival of Mitsubishi and the financial clout of its new owner will enable Eneco to develop a broader base of renewable energy assets, according to the statement released by the power company. The Japanese industrial giant has committed a €1 billion internal loan to finance Eneco’s long-term investment.

“We are impressed by Eneco’s achievements and its market position and intend to further build on that position,” said Mitsubishi CEO Takehiko Kakiuchi. “Eneco and we have been successfully working together since 2012 in a long-term strategic partnership and, as a result, have a proven track record of successful collaboration on various renewable energy projects.”

Under the terms of the acquisition, Eneco will retain subsidiaries including electricity and gas suppliers Oxxio and Hamburg-based Lichtblick, housing corporation renewable energy supplier Woonenergie, smart meter and big data business Quby, and clean energy agricultural operation AgroEnergy.

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