By Jan Hromadko
German utility RWE AG (RWE.XE) said Thursday that it has agreed
to sell its Czech gas grid unit Net4Gas to a consortium comprising
Europe's largest insurer and a Canadian infrastructure fund in a
deal worth around 1.2 billion euros ($1.5 billion).
In a written statement, RWE said it will sell the business to
Allianz SE's (ALV.XE) investment unit, Allianz Capital Partners,
and Borealis, the investment arm of Canadian pension fund Ontario
Municipal Employees Retirement System.
On top of the purchase price, the buyers will also take over
around EUR400 million in debt, bringing the enterprise value of the
transaction to EUR1.6 billion, a spokeswoman for RWE said.
RWE said it expects the transaction to close in the second half
of 2013.
The sale is part of a broader disposal program at RWE, which
needs to reduce its debt as it refocuses its business to mitigate
low power prices in a weak European economy and as it digests
Germany's complete nuclear exit over the next 10 years, which has
cost it billions of euros in impairments and lost profits.
Earlier this months, RWE said it also seeks to sell its entire
oil and gas exploration and production business to raise cash to
strengthen its balance sheet, as muted energy demand in Europe
sharply erodes the price it can charge for its electricity.
Including the Net4Gas sale, RWE's disposal proceeds now amount
to around EUR3.3 billion.
Net4Gas, which operates a gas transmission network that
stretches more than 3,600 kilometers across the Czech Republic, is
a crucial piece of European energy infrastructure as it transports
large amounts of Russian natural gas into central and western
Europe via the Ukraine.
However, alternative new gas transportation routes like the Nord
Stream Baltic Sea pipeline have somewhat reduced the strategic
importance of Net4Gas. New pipeline infrastructure was added in the
last few years, partly as a result of disputes between Russia and
the Ukraine over gas prices that caused major supply disruptions in
eastern and southern Europe.
In the sale of Net4Gas, the consortium between Allianz and
Borealis fended off several competing bids, including from
Australian banking giant Macquarie Group Ltd., (MQG.AU).
Macquarie last year acquired a gas transmission grid from German
utility E.ON SE (EOAN.XE) and previously bought RWE's German gas
grid business, Thyssengas.
JPMorgan Chase & Co. (JPM) was managing the sale for
RWE.
Write to Jan Hromadko at jan.hromadko@dowjones.com
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