ΚΙΝΗΣΗ-ΟΡΟΣΗΜΟ
- 30 Apr 2023
- economy
The Public Electricity Company ("D.E.H") announces yesterday that it has entered into a binding agreement with EnelS.p.A. (“Enel”) for the acquisition of all the holdings held by Enel and its subsidiaries in Romania, for a total consideration of approximately €1,260 million (based on the total value of the business of approximately €1,900 million).
The total consideration is subject to regular adjustments and includes an earnings mechanism in the context of a possible additional payment based on a future increase in the value of the Trading activities.
Completion of the acquisition is expected to take place by the third quarter of 2023 and will be subject to certain conditions (conditions precedent) customary in such transactions, including among others the approval of the competent competition authorities.
The acquisition is a milestone for D.E.H.'s growth strategy, with the acquisition of a significant portfolio of renewable energy sources (both operational and maturing projects) and market-leading distribution and marketing activities. The acquisition also constitutes the first major expansion of D.E.H. abroad.
D.E.H. intends to finance the acquisition through a combination of debt and equity on its balance sheet, of which €800 million will come from already secured debt financing available in the form of a €485 million 5-year loan from Greek banks, as well as a loan- bridge facility of €315 million from international banks.
CitigroupGlobalMarkets Europe AG, GoldmanSachs Bank Europe SE and HSBC Continental Europe are acting as financial advisors and Milbank LLP as legal advisor to D.E.H., in the context of the acquisition.
Mr. Georgios Stassis, President and CEO of D.E.H., stated: "This acquisition is completely consistent with what we presented in November 2021, in the context of our strategic plan, which provided for our international expansion in the Southeast Europe region, and therefore Enel's activities in Romania are the ideal choice both from a geographical and a business point of view. This is a unique opportunity to acquire a vertically integrated energy company with an attractive valuation, setting in motion the transformation of D.E.H. to the leading clean energy company in Southeast Europe. We are confident that this important development will contribute to the development and improvement of D.E.H.'s competitiveness. both internationally and domestically, with the ultimate result of creating value for our stakeholders".
The earnout mechanism
As noted by PTE circles, the purchase agreement, as is customary in such transactions, includes a provision for a possible additional payment (Earn-out), based on a specific mechanism, in the event that Enel Romania's Trading activity acquires value in the next 2 years greater than the one included in the price of €66.5/customer. It is essentially a mechanism for sharing any additional value created in the activity in question between PTE and Enel exclusively for the next two years, beyond the agreed upon. The size of the additional payment increases as the value added increases. In other words, it is a win-win deal for both sides, which proves that the price achieved by PPC is extremely beneficial. In any case, such an additional payment, if it eventually arises, will be small and will not affect the economics of the transaction.
