MILAN (Reuters) - Italy’s biggest utility Enel (ENEI.MI) sees acquisitions as the only way to grow its core distribution business and is committed to pursuing targets round the world, the utility’s CEO told Reuters.
“Growth in distribution only happens through M&A. We are doomed to M&A in this area going forward,” Francesco Starace said in an interview.
Europe’s biggest utility, which owns a majority stake in Spanish utility Endesa (ELE.MC), is focusing on green energy and grids to offset a crisis in traditional power generation.
Earlier this year it bought Brazilian power distribution company Celg-D for about $640 million.
Asked if Enel was interested in German energy group Innogy (IGY.DE), Starace said the company looked at everything, adding “but that doesn’t mean we’ll buy”.
He said Innogy was a big distributor and renewables player which was in principle an interesting combination.
Innogy, carved out from RWE (RWEG.DE) last year to focus on energy and gas networks, renewables and retail, has been a subject of takeover speculation.
Starace has previously said Enel is not interested in large-scale M&A deals since they tend to destroy value.
Asked about plans to sell its Reftinskaya coal power plant in Russia, Starace said the process was underway and all binding bids would probably be in place by the end of the year.
“The sale should happen in the first quarter,” he said.
Starace said he was not concerned about recent tax proposals in the United States where Enel has significant renewable operations.
A Republican tax bill includes cuts to renewable energy tax credits considered critical to enabling wind projects to compete with fossil fuel plants.
“We are very happy to be a player there. I don’t see a big issue,” he said.
Enel, controlled by the Italian Treasury, is rolling out an ultrafast broadband network across Italy through its Open Fiber unit to compete with a rival network of Telecom Italia (TLIT.MI).
The company is negotiating a 3.5 billion euro ($4 billion)project finance deal with banks to help fund the project.
“We’ll wrap it up at the end of the first quarter,” he said.
($1 = 0.8593 euros)
Reporting by Stephen Jewkes, editing by David Evans