Germany's EnBW Takes Stake in VNG
German utility groups EnBW, EWE and municipal shareholders group EWE-Verband on April 20 announced a restructuring of their shareholdings, thereby fulfilling an arrangement reached in principle six months ago and ending a legal dispute between two of the companies.
EnBW now has a 74.2% stake in Leipzig-based German gas firm VNG, completing an agreement reached last October to acquire the stake from EWE.
Also EWE-Verband and EWE jointly acquired 10% of EWE's shares from EnBW, which will continue to own 6% of EWE shares until 2019, when they will be acquired by EWE-Verband at the latest. That is also the year that has been set as a deadline for EWE-Verband and EWE to find a new strategic partner for EWE.
Last month VNG Group said it had made a €53mn net loss in 2015, compared with a net profit of €184mn in 2014, describing its result as "far below expectations." The group, which is roughly the fourth largest marketer of gas in Germany, also has a Norway-based upstream business VNG Norge.
EnBW CEO Frank Mastiaux said: "We have succeeded in finding a solution together with EWE that offers both companies the room they need for further strategic growth. We intend to achieve our ambitious targets in the gas business by working in close cooperation with VNG." Mastiaux headed E.ON's renewables and later international businesses before his appointment as EnBW CEO in October 2012.
EnBW – Germany's third largest power group – says it laid the foundations for expansion and strategic development of its gas business when it concluded a 1.9bn m3/yr ten-year contract to buy gas from Russia's Novatek in 2012 and acquired all shares in southwest German gas supplier GVS and gas transport network operator Terranets in 2014. Even without VNG, EnBW has a 1,900-km gas transport network and sold 6.9bn m3/yr in 2014. The southwest German state of Baden-Wurttemberg and regional power producer Oberschwabische Elektrizitatswerke (OEW) are EnBW’s main shareholders, each with 46.75%.
EnBW's latest annual report stated that in May 2013, EWE submitted an arbitration request to the German Institution of Arbitration against EnBW. Last October EnBW agreed with EWE to the fundamental restructuring of shareholdings outlined above. Once concluded, the dormant arbitration proceedings were to be terminated by mutual agreement, the EnBW report noted.
Mark Smedley