UPDATE 2-UGI to buy Total's LPG distribution business in France

Wed Jul 2, 2014 1:31pm EDT

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PARIS, July 2 (Reuters) - U.S. utility UGI is to buy Total's liquefied petroleum gas (LPG) distribution business in France for about 400-450 million euros ($545-$613 million), marking another step in the French oil major's efforts to shed assets in mature markets to boost returns.

Total, like industry rivals, is trying to improve shareholder returns and expand in higher-growth emerging markets. The company has already sold its shares in liquefied natural gas engineering group GTT and agreed in May to sell its stake in Azerbaijan's Shah Deniz II gas field to Turkey's state oil company TPAO for $1.45 billion.

For UGI, which has a presence in 16 European countries, the deal is an opportunity to cut costs via economies of scale and is likely to improve margins in the French market.

Total said it had entered into exclusive talks with UGI, after having received a firm offer by the U.S. group. A Total spokesman declined to comment on the amount mentioned in Wednesday's UGI statement on the proposed deal.

Total had initially put a 750 million euro price tag on the business, Les Echos reported earlier this year, but that was judged too high by potential bidders.

Totalgaz employs about 750 people including affiliates and generates annual revenues of close to 1 billion euros. It is the number 2 player in the LPG business in France, behind Butagaz and ahead of UGI, which operates in France under the Antargaz brand, which had sales of 757 million euros.

Total, which is also in talks with PetroChina to sell its stake in a Chinese refinery after nearly two decades of investment, has managed its asset portfolio more actively in the past few years.

It has sold stakes where it only had a minority interest and has sought to gain exposure to markets with a growing population where energy needs are increasing rapidly.

UGI shares, which have risen more than 20 percent in the past six months, were down marginally at $50.46 on the New York Stock Exchange by 1615 GMT. Shares in Total, also up about 20 percent this year, closed down 0.54 percent in Paris at 53 euros. ($1 = 0.7345 euros) (Reporting by Michel Rose in Paris and Ashutosh Pandey in Bangalore; Editing by Saumyadeb Chakrabarty and Jane Merriman)

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