French oil major Total announced its acquisition of a 74.33 per cent stake in French utility Direct Energie for US$1.7 billion in an attempt to expand in the gas-electricity market.
The deal will see Total become the second-largest power supplier in France, after EDF. Total said it is firmly establishing itself as a leading alternative supplier by combining its 1.5 million client portfolio with Direct Energie’s 2.6 million client portfolio.
This combination will enable Total to pursue its ambitious development program to become a standard-setting player in electricity supply in France and Belgium, targeting over 6 million customers in France and more than 1 million customers in Belgium by 2022.
“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 theGroup’s strategy to expand along the entire gas-electricity value chain and to develop lowcarbon energies, in line with our ambition to become the responsible energy major”, said Patrick Pouyanné, Chairman and CEO of Total.
Valentina Kretzschmar, research director, corporate analysis, at global natural resources consultancy Wood Mackenzie, said: “The US$1.7 billion acquisition of Direct Energie is Total’s largest investment in low-carbon assets to date.Total was already ahead of its peers in terms of the M&A spend on renewables and other clean technologies, which included Saft, Lampiris and Eren.”
With this transaction, Total is also pursuing and expanding its development in the power generation market, with Direct Energie’s power generation activities offering an excellent complementarity with those of the Total group’s subsidiaries operating in these fields. Direct Energie’s installed capacity of 1.35 GW, including 800 MW of gas-fired power plant and 550 MW of renewable electricity, will supplement Total’s 900 MW installed capacity.
Kretzschmar added: "Total’s acquisition of Direct Energie 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.”