FRANKFURT/MILAN/LONDON, Aug 8 (Reuters) - Several Italian utilities and private equity groups are expected to hand in tentative offers worth about 2 billion euros ($2.7 billion) for E.ON’s Italian unit early next week, people familiar with the matter told Reuters.
Germany’s leading energy group has put its Italian and Spanish assets on the block in two separate but simultaneous auctions as it aims to cut debt and restructure.
Italian energy group Edison, owned by France’s EDF , is expected to bid for E.ON Italia as are Rome’s Acea , Genoa’s Erg Spa and utilities from the Veneto and Trentino regions, the sources said.
Private equity groups such as Terra Firma, KKR and First Reserve are also expected to hand in tentative offers by the Aug. 11 deadline, they added.
One of the sources said GDF Suez had also expressed interest in E.ON Italia and had been looking for advisers, but it remained unclear if it would be among the bidders.
Hit by weak energy demand in Europe, low wholesale power prices and rival solar and wind power, E.ON and peers such as RWE and EnBW have embarked on multi-billion-euro asset sale programmes. They are suffering from large debts, with E.ON’s net debt standing at 31 billion euros as of March 31.
The auction of E.ON Italia - the country’s No. 4 electricity provider - had initially been planned to be finalised in the second quarter, but faced delay due to the depressed market for power assets in Europe.
E.ON is now hoping to see fresh demand for its Italian unit, which it aims to sell for up to 3 billion euros ($4 billion), while bidders are expected put the price closer to 2 billion euros, the sources said.
“E.ON is flexible and would sell different assets to different bidders: you need to consider that some of these bidders have no existing operations in coal or gas,” a person familiar with the matter said, adding E.ON was therefore considering all options for the assets.
According to an internal presentation obtained by Reuters,
the assets include about 6 gigawatts (GW) of generation capacity, a stake in a liquefied natural gas (LNG) terminal as well as sales activities.
According to the presentation of “Project Chicago” as the sale is dubbed internally, E.ON expects 531 megawatts (MW) of hydro assets to be the most valuable holding, potentially accounting for 35 percent of the portfolio’s value.
Its 328 MW wind farms and 46 MW solar plants are expected to account for a combined 25 percent, while the 3.5 GW in gas power plants are seen worth only 15 percent and the 600 MW coal plant just 10 percent of the portfolio’s value, the presentation shows.
E.ON employs about 1,000 staff in Italy - less than 2 percent of its total workforce - and has 860,000 customers.
E.ON and the potential bidders declined to comment, except for Edison and Acea which were not immediately available for comment.
Erg Chief Executive Luca Bettonte said on Thursday the company was interested in certain deals in Italy to grow its renewables business.
1 US dollar = 0.7467 euro Reporting by Arno Schuetze, Stephen Jewkes, Pamela Barbaglia, Sophie Sassard, Christoph Steitz and Massimo Gaia; Editing by Mark Potter