A consortium featuring Mitsubishi and Japanese utility Chubu is set to buy out European energy major Eneco as Mitsubishi targets further European growth.
The shareholders' committee, Eneco and the consortium have reached an agreement on the proposed sale of all shares in Eneco.
In sealing the deal, the Mitsubishi-led consortium has fended off fierce interest from other would-be suitors including O&G major and Eneco compatriot Shell.
The €4.1 billion (£3.5 billion) deal will see Mitsubishi take an 80% stake in the company with Chubu holding the remaining 20%, pending regulatory approval of the transaction.
It is set to cement Mitsubishi’s place in the European supply market as it pursues “further growth”, having already purchased a 20% sake in UK utility OVO.
OVO is on the verge of becoming the second-largest supplier in the UK, pending approval of its take-over of SSE’s energy supply division by the Competition and Markets Authority. If completed as expected, OVO will have in excess of 6.7 million customers, second only to Centrica's British Gas unit.
The acquisition of Eneco is to be funded fully through existing cash resources from the consortium, with the supplier to remain intact as an “integrated and independent Dutch energy company”.
The consortium intends to further expand Eneco internationally, with plans to make the company the European centre of all energy-related activities of Mitsubishi and Chubu.
Mitsubishi also intends to transfer over 400MW of its offshore wind activities to Eneco.
The transaction is pending approval from the European Commission and the German competition authorities, the Dutch minister of Economic Affairs and Climate Policy pursuant to the Dutch Electricity Act and the Belgian federal minister for energy.
Approval is to be requested “as soon as possible”, with the transaction expected to close before summer 2020.
The controlled auction was announced to the market in February and a first selection of interested parities made in April. Qualifying parties were then invited to submit a non-binding offer, with a further selection made based on those offers. Parties were selected for the second phase, and in early November parties submitted a binding offer.
It was concluded that the consortium’s offer contained the best terms and conditions for shareholders and all other stakeholders of Eneco, including employees and customers.
Over 95% of Eneco shareholders have expressed the intention to sell their shares in Eneco, with the transaction to be definitive if shareholders together holding 75% of the issued and outstanding share capital of the business decide to sell the shares.
If the consortium ultimately holds at least 95% of the shares, it can initiate statutory squeeze-out proceedings to obtain 100% shares.
The shares in Eneco are currently held by 44 Dutch municipalities. They will receive a regular dividend over the financial year 2019 in Q2 2020 or in any case prior to completion of the proposed transaction.
Eneco’s CEO, Ruud Sondang, is to resign upon completion of the transaction, remaining as senior adviser. He will be succeeded by a Dutch CEO, Eneco said.
Eneco’s chief customer office Hans Peter, and a representative of Mitsubishi will be added to the current board of management.
Takehiko Kakiuchi, CEO of Mitsubishi Corporation, said the companies share the same long-term vision, with Eneco “well-positioned to continue to play a leading role in the energy transition”.
“Eneco fits in perfectly with our current energy activities and provides us with a platform to further grow in the European market in which we intend to have a leading position in the energy transition.”
Eneco itself owns a minority stake in Germany’s Next Kraftwerke, which operates a virtual power plant in Europe.
Mitsubishi has a long-standing relationship with the supplier, having been a business partner for Eneco since 2012.
Arjan van Gils, alderman responsible for finance in the municipality of Rotterdam and chairman of the shareholders' committee, said: “The consortium has the required financial strength to further build Eneco, both in light of the energy transition as well as commercially.
"In the upcoming period, we will further explain the proposed transaction to Eneco's 44 shareholders."