Total agrees €1.4 bln Direct Energie share acquisition

France’s Total has worked out a deal with Direct Energie shareholders to acquire 74.33 percent of the share capital in a €1.4 billion ($1.7 billion) transaction, expanding its gas-electricity value chain presence. 

Once this acquisition, to be financed through Total’s available cash, has been completed, Total will file with the French Financial Market Authority (Autorité des marchés financiers) a mandatory tender offer on the securities of Direct Energie which are traded on Euronext Paris at the same price per share of €42.

This represents a 30 percent premium above Direct Energie’s closing share price on April 17, 2018, and a 24 percent premium above the volume weighted average share price over the past three months and 13 percent above the volume weighted average share price over the past six months.

Direct Energie’s board of directors unanimously approved the transaction and has already decided to recommend to shareholders, subject to the confirmation by the independent expert that the terms of the tender offer are fair, to tender their shares into the offer that will be filed.

In this respect, Direct Energie’s Board of Directors has decided to appoint an independent expert in order to confirm that the terms of the tender offer are fair in accordance with market regulations.

“Through this transaction, Total is actively pursuing its development in electricity and gas generation and distribution in France and Belgium,” said Patrick Pouyanné, chairman and CEO of Total.

This combination will enable Total to pursue its development program to become a player in electricity supply in France and Belgium.

With this transaction, Total is also pursuing and expanding its development in the power generation market, with Direct Energie’s power generation activities. Direct Energie’s installed capacity of 1.35 GW, including 800 MW of gas-fired power plant and 550 MW of renewable electricity, will supplement Total’s 900 MW installed capacity.

Given Direct Energie’s project portfolio in this area (a 400 MW gas-fired power plant under construction and a 2 GW pipeline of renewable electricity projects in France), Total Eren in emerging countries and Sunpower in the United States, Total aims to have a global capacity of at least 10 GW of installed capacity within five years, either in the form of gas-fired power plants or in the form of renewable electricity capacities.

The acquisition of the blocks of shares is expected to be completed during the third quarter and the proposed tender offer will be filed immediately after such completion.

In the event that the number of shares not tendered to the offer would not represent more than 5 percent of the share capital or voting rights of Direct Energie, Total intends to request the implementation of a squeeze-out.