Italgas to bid for Gas Natural's Italian assets to lift market share

Source: Gas Natural Fenosa

 

Milan (Reuters)—Italy's biggest gas distributor Italgas will bid for the Italian assets of Spain's Gas Natural and buy other smaller companies to help it boost its market share by one third.

Italgas, ranked the third largest gas distributor in Europe, aims to increase its share of the Italian market from 30% to approximately 40%.

The Italian gas distribution sector is highly fragmented, with more than 220 operators. New rules were introduced to streamline the industry by cutting concession areas from almost 7,000 to 177, but awards of concession areas have been delayed.

"Gas Natural issued an information memorandum last Friday. We will be participating in the bid," Italgas CEO Paolo Gallo told analysts in a call on the group's 2017–2023 plans, adding that his firm was only interested in the Spanish firm's distribution assets.

Sources have said the Gas Natural's Italian distribution assets could be worth up to €550 MM ($618 MM).

"Non-binding bids are expected by June 23, with binding bids in September," Mr. Gallo said, adding that the group would also consider buying smaller players in the industry to add about 200,000 users by 2018–2019.

More mergers and acquisitions (M&As) were needed to help offset delays in Italy's new tendering process for distribution concession areas, Mr. Gallo said, adding that he now expected that reforms to concessions areas would not be completed until 2021.

"There are a lot of M&A opportunities, since many operators cannot meet the new conditions and investment requirements for bidding, but we just do not know when," he said.

To help build market share in Italy, Italgas plans to invest €5 B ($5.6 B) in the next seven years, with €3 B ($3.37 B) to upgrade and digitize its network, and a further €2 B ($2.24 B) to fund the tender bids.

(By Stephen Jewkes and Giancarlo Navach; editing by David Goodman and Edmund Blair)

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