Naturgy snaps up Mubadala’s stake in Medgaz

The Spanish utility company, Naturgy and Algeria’s Sonatrach have entered into an agreement with Mubadala for the acquisition of the 42.09 percent stake that it holds in Medgaz.

Following the completion of the transaction, Medgaz will be entirely owned by Sonatrach with a 51.0 percent stake and Naturgy with the remaining 49.0 percent, with a shareholder agreement that gives them joint control of the pipeline.

To remind, Medgaz operates the deep-water gas pipeline from Algeria to Europe, through Spain. Sonatrach is the owner and operator of the gas pipeline from the Hassi R’Mel gas fields to Beni Saf on the Algerian coast, where it connects with Medgaz. The Medgaz pipeline connects in Almería to the Spanish transport network, operated by Enagas.

The transaction will allow Naturgy to transform its current 14.95 percent stake in Medgaz, from a financial investment with very limited governance rights, into to a strategic stake that will allow the joint control of the company together with Sonatrach.

Naturgy will acquire 34.05 percent of Medgaz for €445 million ($491.2 million) through a special purpose vehicle (SPV), which can be opened to a financial partner thus reducing Naturgy’s equity contribution. The SPV will be funded with a non-recourse loan of €260 million to optimize its capital structure.

The Algerian company Sonatrach is the first gas supplier to Spain by volume and is, in turn, the fourth-largest shareholder of Naturgy with a 4 percent stake. In addition, the transaction does not exclude the possibility of continuing the EMPL business by renewing this concession expiring at the end of 2021.

The completion of the transaction is expected to occur prior to the end of March 2020.