Looking to expand in the natural gas-electricity value chain, French major Total SA has agreed to acquire a 74.33% stake in French utility Direct Energie (DE) for $1.7 billion. The move will make Total the second-largest power supplier in France, after EdF.
“Through this transaction, Total is actively pursuing its development in electricity and gas generation and distribution in France and Belgium,” said Patrick Pouyanne, chairman and chief executive officer of Total, and is in line with the company’s ambition to become “the responsible energy major,” he said.
The acquisition marks the company’s largest investment in low-carbon assets to date, noted Valentina Kretzschmar, research director, corporate analysis, at Wood Mackenzie. The deal has “more than doubled the company’s total inorganic investment, from $1.6 billion to over $3.3 billion since 2015,” she said, and “shows that the company is serious about its ambition to build value across the electricity value chain, with both gas and renewables playing a key role.”
With the deal, Total is establishing itself as a leading alternative supplier by combining its 1.5 million client portfolio with DE’s 2.6 million client portfolio with a target of over 6 million customers in France and more than 1 million customers in Belgium by 2022, the company said.
Total also is pursuing and expanding its development in the power generation market. DE’s installed capacity of 1.35 Gw, including 800 Mw of gas-fired power plant and 550 Mw of renewable electricity, adds to Total’s 900 Mw installed capacity. Given DE’s project portfolio in this area—a 400-Mw gas-fired power plant under construction and a 2-Gw pipeline of renewable electricity projects in France; Total Eren in emerging countries; and Sunpower in the US—Total aims to have a global capacity of at least 10 Gw of installed capacity within 5 years, either in the form of gas-fired power plants or in the form of renewable electricity capacities, the company said.
The transaction remains subject to the information and consultation process of relevant employee representative bodies in accordance with applicable laws. Acquisition of DE’s controlling blocks is subject to the condition precedent related to the prior approval of the European commission.
Contact Mikaila Adams at [email protected].
