Electrabel said on Thursday it had agreed to buy the European assets of Tractebel, its fellow Belgian power utility and shareholder, for 590 million Euro ($507 million). The move simplifies the relationship between the two companies and is expected to be earnings enhancing for Electrabel, after depreciation and goodwill, this financial year.
Tractebel, the energy division of the French multi-utility Suez, has a 40 per cent stake in Electrabel. The transaction follows a review started last November, at Tractebel’s suggestion, to pool assets and make Electrabel the main brand outside France and Belgium.
Electrabel acquired stakes in power stations in Poland, Italy, Portugal and Hungary, lifting its total generating capacity by 4317 MW to 25 359 MW. It also gained 100 per cent of its commercial joint ventures with Tractebel in Scandinavia, Germany and Poland.
The boards of Tractebel and Electrabel approved the transfer on Wednesday but the actual acquisition of the Polish and Hungarian power stations would not be able to go ahead until approval has been gained from the national regulatory authorities.
Suez had originally considered merging Tractebel and Electrabel to form a large power utility that would achieve the savings needed to compete in the low-margin European market. However, it dropped that idea in favour of an asset transfer last year because of fears that its exposure to price uncertainty in the Belgian market would be increased. The transfer would leave Tractebel free to pursue more lucrative opportunities in international markets outside Europe.
In early trading in Brussels, Electrabel’s shares gained 0.5 per cent to 238.8 Euro.