Austrian oil firm OMV has agreed to buy Austrian hydropower generator Verbund for up to 11.5 billion euros (US$14.7 billion) in a deal some analysts see as a state attempt to create a national energy “champion.”
OMV and Verbund, both state-controlled, said the takeover, to be the biggest in Austrian history, would combine OMV’s gas supplies with Verbund’s plans to develop gas-fueled power and facilitate expansion in central Europe and the Balkans. Oil analysts were skeptical about the unusual purchase of a utility by an oil firm and questioned the deal’s business logic.
At a joint news conference May 10 with Verbund, OMV Chief Executive Wolfgang Ruttenstorfer said the new company would build gas-fueled power plants in the region between Turkey and Austria through which OMV plans to build a gas pipeline by 2011.
Verbund seeks gas generation; OMV seeks renewables
“Verbund cannot build any more hydropower stations on a large scale and is instead moving towards gas,” Ruttenstorfer said, adding that a company could only be successful in that field if it were integrated from exploration through to power plants.
Ruttenstorfer also said the deal would broaden OMV’s energy portfolio, moving it towards renewable energy by buying into Verbund’s hydropower. OMV expects savings of roughly 100 million euros (US$128 million) a year through the merger.
OMV said it was offering Verbund minority shareholders 6.5 newly issued shares in the joint company for every Verbund share they own, or 425 euros (US$543.61) cash per Verbund share. Austria owns 51 percent of Verbund and 31.5 percent of OMV. The cash offer, which is at a premium to the exchange offer, values the Verbund stake Austria does not own at 6.4 billion euros (US$8.18 billion).
A year ago, Verbund, Austria’s largest utility, abandoned a planned partial merger with five other Austrian hydropower producers because the synergies it would bring were insufficient. Verbund said changes in the European and Austrian power markets made it impossible to complete the EnergieAllianz deal.