* Snam agrees to buy CDP stake in TAG pipeline
* CDP paid 710 mln euros in 2011 for TAG stake
* Snam to invest 6 bln euros to 2017
* To offer dividend of 0.25 euros/share 2014-15
(Recasts lead, adds analyst comment, shares)
By Stephen Jewkes
MILAN, March 19 Snam, one of Europe's
biggest gas transport groups, has agreed to buy a majority stake
in the TAG gas pipeline carrying Russian gas into Italy as part
of its drive to integrate Europe's patchwork of gas grids.
Snam, controlled by state lender Cassa Depositi e Prestiti
(CDP), has a strategic alliance with Belgium's Fluxys
as it seeks to expand its footprint across Europe.
The company's strategy is in step with long-running
government plans to cut high energy prices by transforming Italy
into a southern European gas hub with supplies from Russia,
North Africa and, further down the road, Azerbaijan.
In its four-year business plan to 2017, Snam announced it
had signed a memorandum of understanding with CDP to buy its 89
percent stake in TAG.
The 400-km (250-mile) pipeline, 11 percent owned by
Austria's OMV, has long been seen as strategic by
Italy in bringing in Russian gas through Ukraine, Slovakia and
Italy, which imports around 90 percent of its gas needs, has
become increasingly dependent on Russian gas after oil major Eni
agreed last year to take lesser volumes from Algeria.
Eni Chief Executive Paolo Scaroni has said any gas crisis
stemming from the growing dispute between Russia and Ukraine
over Crimea would not for the time being threaten Italy's energy
needs but added if another gas source, other than Russia, went
down the problems would be serious.
"The (TAG) acquisition, likely to be done through a capital
increase reserved for CDP, will not only help boost capital but
will also boost earnings by 3-4 percent and support dividend
policy," Societe Generale utility analyst Alberto Ponti said.
Snam CEO Carlo Malacarne previously said that to buy TAG the
group may issue new shares for CDP, which bought the pipeline in
2011 for 710 million euros ($988 million), including debt.
Snam's four-year business plan did not disclose any figures
for the size of the deal or when it would be completed.
CDP owns 30 percent of Snam, which gives it a controlling
grip on shareholder meetings. It is currently looking for a
buyer, or buyers, for a stake of up to 49 percent in the vehicle
which controls Snam and which could soon also control a similar
stake in power grid operator Terna.
Snam - which operates regulated gas transport, distribution
and storage assets - said it planned to invest 6 billion euros
to 2017 to develop the Italian gas grid "with a view to
promoting the true interconnection of European networks".
In its previous plan, the gas transport group had earmarked
investments of 6.9 billion euros but that included about 700
million euros to buy a French gas network in a deal completed in
Gas demand in Italy has fallen by more than 15 percent since
2008 due to poor industrial production in a prolonged economic
Snam also said it would offer a dividend of 0.25 euros per
share both this year and next, in line with last year's
dividend. It said it would pay the dividend once a year and
would not offer an interim payment.
"Some analysts had been concerned the dividend could be cut
so that's good news, though what has raised a few eyebrows is
that they've only given visibility out to 2015," Ponti said.
An interim regulatory review for the core business of
transmission and distribution is expected in 2016 and some
analysts are concerned that falling Italian interest rates could
As a regulated business Snam has its returns set by the
energy regulator which takes account of sovereign bond yields.
Snam shares were down 0.8 percent at 1048 GMT while the
European utility index was down 0.2 percent.
($1 = 0.7188 euros)
(Reporting by Stephen Jewkes; Editing by Lisa Jucca and Pravin