17 May, 2002 – Belgian utility Electrabel made a significant move into the Italian electricity market when it announced the establishment of a joint venture with Roman utility Acea Thursday.
Electrabel will invest over €200m ($183.6) in the venture in which it will own 40 per cent with Acea owning 60 per cent. The joint venture will span electricity trading, generation and sales.
“For Electrabel this strategic joint venture is perfectly in line with its strategy and offers a unique opportunity to enter the retail market thus strengthening its activities and raise its commercial profile in Italy,” it said in a statement.
Electrabel is the sixth largest utility in Europe by sales and has been seeking to expand its position in the lucrative Italian market, where electricity prices are the highest in Europe. It unsuccessfully bid for the first two generating companies which Enel was forced to sell-off. Acea and Electrabel have formally expressed interest in a third company to be sold by Enel and plan to bid together.
The established of the joint venture will give Electrabel access to Acea’s customer base in and around Rome. Electrabel will use its expertise to develop this market and use it as a base for expansion within the region and throughout Italy as the countries energy liberalization laws take effect. Electrabel’s chief executive Willy Bosmans said at a news conference that, after Benelux and France, Italy had the potential to become the company’s next most important market.
“The deal develops the potential, weight and importance of Acea,” Rome Mayor Walter Veltroni, whose city holds 51 percent of Acea, told a news conference in Rome.
The deal was welcomed by analysts who saw benefits for both. “It’s a great step forward for Acea, offering it a chance to grow,” said a London analyst. “Electrabel brings its expertise and Acea offers its clients. Together, they can push ahead – if they were alone they would find it harder to move ahead.”
“Electrabel has the know-how to build gas-fired power plants and Acea has the political influence,” said KBC Securities analyst Stefaan Adriaens.
Acea said that the value of the joint venture would have an initial enterprise value of €305m and that it planned to pursue the opportunities that arose from the government decree making it easier to build power plants.
Electrabel sold about two TWh to Italy through a local power plant and an affiliate, a fraction of the 105 TWh total sold in 2001.
Electrabel, 42 per cent owned by French utility giant Suez, has been expanding in Europe as competition has begun to encroach on its home market of Belgium.