Energy firm mergence triggers interest conflicts
Energy firm mergence triggers interest conflicts
The catalyst for the frenetic merger activity among European utilities is the run-up to full deregulation of the European Union’s energy market. For more than a decade the European Commission has been trying to enable energy producers and distributors to compete freely across national borders. By then member states are supposed to have implemented all EU energy directives.
But at least the objections to the deal are commercial, rather than political or legal, which is more than can be said for Europe’s two other big energy mergers. It is a full year since a failed bid for Scottish Power prompted Wulf Bernotat, the boss of E.ON, to plot his big coup: a takeover of Endesa, which would make E.ON one of the world’s largest electricity and gas firms (flotation cell), with over 50m customers in more than 30 countries.
Next year consolidation will continue, though at a less busy pace. Valuations of European utilities are now very high. Governments remain opposed to acquisitions of utilities by foreigners—except, that is, in Britain. After the takeover of Scottish Power, foreigners will own four of Britain’s six big utilities. Only Centrica, a gas retailer, and Scottish and Southern, the third-biggest energy utility, will remain in domestic hands. They are tempting targets, but any suitor will need deep pockets—and confidence that the European market will indeed, despite all the political meddling, soon become truly open.
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