(Adds background, detail)
PARIS, July 2 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
($1 = 0.7345 euros)
(Reporting by Michel Rose in Paris and Ashutosh Pandey in
Bangalore; Editing by Saumyadeb Chakrabarty and Jane Merriman)