French multinational oil and gas giant Total has successfully acquired a majority acquisition of French electricity utility Direct Energie in a move which was announced in April of this year and is intended to fast-track Total’s expansion into the French and Belgium electricity and gas markets.
Total, the French oil major ranked as the fourth largest international oil and gas company in the world, announced its intention in mid-April to acquire 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) — a move which was unanimously approved by Direct Energie’s Board of Directors and recommended 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 in April. “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.”
Fast forward to July 6, and Total and Direct Energie announced the completion of the acquisition of 73.04% of the share capital of Direct Energie for €42 per share in a deal worth €1.4 billion. The acquisition was immediately followed by the filing by Total of a mandatory tender offer for shares in Direct Energie not yet held by Total at the same price of €42 per share.
“The Board of Directors unanimously recommends to Direct Energie’s shareholders to tender their shares. This operation is indeed extremely positive for Direct Energie, its teams and clients,” said Xavier Caïtucoli, Chairman and CEO of Direct Énergie.
“This operation allows us to accelerate our integration downstream along the full gas and power value chain and to reach critical mass in the French and Belgium markets where we are growing fast,” added Patrick Pouyanné, Chairman and CEO of Total.
The deal not only expands Total’s supply base into France and Belgium, it also increases its renewable electricity generating capacity — contributing to the company’s aim of sourcing 5 gigawatts (GW) from renewable energy sources within five years. Acquiring Direct Energie will add 1.35 GW worth of clean energy to Total’s existing portfolio of clean energy capacity.
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