Why PPC’s Romanian purchase is important
For Public Power Corporation, the deal reached with Enel that was announced on Thursday regarding the acquisition of the Italian energy company’s activities in Romania is particularly important.
The Greek utility has secured its presence in the large and rapidly developing Romanian market, acquiring a company that is the largest renewables producer and the second in the supply and distribution of electricity in Romania. At the same time, it will become a strategic energy player in the region and gain access to the energy corridor that starts from Romania, crosses Bulgaria and ends in Greece.
With the completion of the acquisition in the third quarter of the year, PPC will add to its potential more than 130,000 kilometers of distribution network, an additional 3.2 million new customers and 534 megawatts of RES in operation. Essentially, it will double its production from RES and tackle the regulatory risk from the restrictions imposed on it to reduce its share of the Greek market and thereby achieve an increase in its size.
The deal concerns all the holdings held by Enel and its subsidiaries in Romania for a total amount of approximately 1.26 billion euros (based on the total value of the business, which amounts to €1.9 billion).
The agreement includes a provision for a possible additional payment (earn-out), based on a specific mechanism, in the event that in the next two years Enel Romania’s trading activity acquires a value greater than that included in the consideration of €66.5/customer. This price is well below half that of acquisitions in the Greek market. In terms of networks, in Romania PPC is buying at approximately half of the price paid by Macquarie for the acquisition of 49% of the Greek grid operator (DEDDIE). The price for RES projects was also set at correspondingly low levels compared to acquisitions in Greece.
“This acquisition is completely consistent with what we presented in November 2021 in the context of our strategic plan, which envisaged our international expansion in Southeastern Europe, so Enel’s activities in Romania are the ideal choice both geographically and as well as from a business point of view,” commented PPC Chairman and CEO George Stassis. He knows Enel Romania very well from his tenure there before taking the helm of PPC.
