By Jan Hromadko and Jessica Hodgson
FRANKFURT--German utility RWE AG (RWE.XE) has agreed to sell its
Czech gas grid unit Net4Gas to a consortium comprising Europe's
largest insurer and a Canadian infrastructure fund, a person
familiar with the transaction told Dow Jones Newswires
Thursday.
RWE has agreed to 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.
The person declined to provide a valuation of the deal, but said
recent media speculation that the price tag would be around 1.8
billion euros ($2.3 billion) was exaggerated.
Other people familiar with the transaction previously said that
a fair valuation of RWE's Net4Gas business would be around EUR1.4
billion.
RWE and Allianz declined to comment. Borealis couldn't
immediately be reached for comment.
The sale is part of a broader disposal program at RWE, which
needs to reduce its debt pile as it restructures its business to
mitigate the impact of low power prices in a weak European economy,
and as it continues to prepare for Germany's complete exit from
nuclear energy over the next ten years, which has cost it billions
of euros in impairments and lost profits.
Earlier this month, RWE said it also plans 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.
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 Ukraine.
However, alternative new gas transportation routes, like the
Nord Stream Baltic Sea pipeline, have reduced the strategic
importance of Net4Gas. New pipeline infrastructure has been built
in the past few years after disputes between Russia and Ukraine
over gas prices caused major supply disruptions in eastern and
southern Europe.
In the sale of Net4Gas, the consortium between Allianz and
Borealis fended off offers from other suitors, including Australian
banking giant Macquarie Group Ltd. (MQG.AU), which filed a joint
bid with Czech investment firm Energeticky a Prumyslovy Holding, or
EPH.
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.
Other bidders in the Net4Gas sale included Czech privately held
financial and industrial group KKCG, infrastructure investment firm
Global Infrastructure Partners, and Belgian gas transmission
company Fluxys SA (FLUX.BT).
JPMorgan Chase & Co. (JPM) was managing the sale for
RWE.
Eyk Henning in Frankfurt contributed to this story
Write to Jan Hromadko at jan.hromadko@dowjones.com and Jessica
Hodgson at jessica.hodgson@dowjones.com
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