French power giant Total has signed an agreement with the controlling shareholders of another France-based power firm Direct Energie to acquire a 74.33% stake in the company for roughly €1.4 billion.
In terms of power generation, Direct Energie has an installed base of 800MW in gas-fired power plants and 550MW of renewable energy. Last October, Direct Energie completed its acquisition of Quadran, which has renewable energy assets predominantly in France.
Moreover, Direct Energie has a 400MW gas-fired power plant under construction and a 2GW pipeline of renewable electricity projects in France, which will complement Total’s own 900MW of installed power capacity.
Combined with Total Eren, its renewables arm in emerging markets, and Sunpower in the US, Total is now targeting 10GW of installed capacity within five years across gas-fired power plants and renewables.
From a wider perspective, Total’s move follows a trend of other oil majors in entering the utility market whilst also snapping up renewable energy assets and other forms of low carbon energy. In this case, Total’s 1.5 million customer portfolio will be combined with Direct Energie’s 2.6 million-strong portfolio in France and Belgium, and Total plans to reach 7 million customers across the two countries by 2022. Total will now be more competitive against its other French utility rivals Engie and EDF.
Other oil majors, Shell and BP have made similar big moves of late. In terms of solar, PV Tech has reported on a panel of operators suggesting that solar companies will have to find a strategic sweet spot in which to operate as big oil majors return to the sector.
Commenting on the latest deal, Patrick Pouyanné, chairman and CEO of Total, said: “Through this transaction, Total is actively pursuing its development in electricity and gas generation and distribution in France and Belgium. 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."
The share purchase price in the deal was €42. Direct Energie’s Board of Directors has already approved the transaction. On completion of the acquisition, Total will file a tender offer with the French Financial Market Authority for the securities of Direct Energie. The transaction remains subject to a consultation process of the employee representative bodies.
Xavier Caïtucoli, chairman and CEO of Direct Energie, said: “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”.
This story previously stated that direct energie was the parent company of Neoen.