Total, the French multinational oil and gas giant, announced on Wednesday that it has entered into an agreement to acquire French electricity utility Direct Energie in a move which is intended to fast-track the company’s expansion into the French and Belgium electricity and gas markets.
The French oil major, ranked as the fourth largest international oil and gas company, announced this week that it would acquire nearly 75% of Direct Energie at a value of approximately 12.5 times its projected 2018 EBITDA — a deal worth around €1.4 billion ($1.73 billion). Direct Energie’s Board of Directors have already unanimously approved the transaction and announced its intention to recommend the move to shareholders.
“Through this transaction, Total is actively pursuing its development in electricity and gas generation and distribution in France and Belgium,” said Patrick Pouyanné, Chairman and CEO of Total. “This friendly takeover is part of the Group’s strategy to expand along the entire gas-electricity value chain and to develop low-carbon energies, in line with our ambition to become the responsible energy major. We are delighted to welcome the Direct Energie teams into Total, who will contribute their skills in the field of electricity and who will be at the heart of the Group’s growth ambition in this field.”
“We welcome this transaction with pride and enthusiasm and we are convinced that combining with Total will be to the benefit of our customers,” added Xavier Caïtucoli, Chairman and CEO of Direct Energie. “The Direct Energie teams will be at the heart of the strategy of one of the greatest French companies. I have no doubt that their hard work, creativity and talents will allow the new entity to expand its ambitions.”
While Total will subsequently expand its gas business, the move may be most important in terms of Total’s expansion into providing electricity to customers in France and Belgium. Total is targeting 6 million customers in France and over 1 million customers in Belgium by 2022, and folding in Direct Energie’s 2.6 million customers with its own 1.5 million gets it over halfway there.
Total will also add to its 900 megawatt (MW) generating capacity, with 800 MW of gas-fired power and 550 MW of renewable electricity generating capacity — as well as an under construction 400 MW gas-fired power plant and 2 GW pipeline worth of French renewable electricity projects. Combine this with the electricity generating capacity that sits under its renewable energy subsidiaries, Total Eren and SunPower (of which Total is a majority owner), and Total is heading towards at least 10 GW worth of installed capacity within five years, made up of natural gas and renewables.
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