HomeWorld RegionsEuropeEdipower buys Enel's Eurogen for $3.2bn

Edipower buys Enel’s Eurogen for $3.2bn

18 Mar 2002 – Eurogen, the second generating company being auctioned by Italian Enel has been bought by Edipower, a consortium led by Italian utility Montedison for €3.7bn ($3.2bn)plus debt.

The outcome of the bidding, which was brought about by the enforced break-up of the monopoly controlled by Italian energy giant, was announced on Sunday following Friday’s 5pm deadline. Edipower beat off a rival bid from the Energia Italiana SpA consortium in tandem with Belgium’s Electrabel.

Edipower is owned 40 per cent by Edison, 13.4 per cent by Aem, 13.3 per cent by Aem Torino, 13.3 per cent by Aar e Ticino Sa di Elettricita (Atel), 10 per cent by UniCredito Italiano, 5 per cent by Interbanca and 5 per cent by a subsidiary of Royal Bank of Scotland). With ten per cent of the Italian market Edipower becomes the second largest electricity provider in Italy behind Enel.

The deal requires Edipower assuming €750m in debt.

Eurogen is the largest of the three gencos former monopoly Enel must sell in order to comply with EU directives. It has six thermoelectric and three hydroelectric plants with total capacity of 7009 MW.

The majority stakeholder in Edipower, is Edison, which Fiat and Electricite de France control through the Italenergia SpA joint venture. The consortium, recently obtained a bridge loan of €4bn to back its bid.

The sale price was in line with market expectations, and it was lower than that paid for the 5500 MW Elettrogen, a more profitable and efficient generating company that Enel sold last year to Spain’s Endesa SA for €2.63bn plus €1.06bn in debt.

Italenergia in October unveiled plans to become Italy’s second-largest electricity and gas company by restructuring, by selling €7bn worth of non-core assets and by investing €5bn over five years.

Umberto Quadrino, Italenergia vice president, said then the group is aiming for 20 per cent of the Italian electricity market, or 14 000 MW of capacity, and 15 per cent of the gas market, or 14bn cubic meters a year, by 2007. That would rank the group just behind electricity giant Enel and oil and gas group Eni SpA (E).

The proceeds from the sale of Eurogen may be used to fund an early dividend payment to the Italian treasury this year of between L2000bn and L3000bn, according to previous Italian media reports. The government is Enel’s biggest shareholder with a 68 per cent stake.

Enel’s financial advisers, Credit Suisse First Boston, Lehman Brothers and Merrill Lynch, are expected to begin the sale process for the third asset right away.

Proposals before the Italian parliament may require Enel relinquishing control of a further 2500 MW of generating capacity.