EON Expands in Turkey Through Asset Swap Deal With Verbund

E.ON SE (EOAN) and Verbund AG (VER), Germany and Austria’s biggest utilities, agreed to swap power-generation assets in Turkey and Germany in a deal valued at about 1.5 billion euros ($2 billion).

EON, based in Dusseldorf, will take Verbund’s 50 percent stake in Turkish power producer Enerjisa Enerji AS in exchange for EON’s interest in eight hydroelectric power plants in Germany, according to a statement today.

EON wants to expand in Brazil and Turkey where energy demand is expected to grow faster than in Europe. Enerjisa, a venture with Turkey’s Haci Omer Sabanci Holding AS (SAHOL) in which Verbund bought a stake for $326.2 million in 2007, has plans for 8,000 megawatts of power capacity in Turkey by 2020 and a 10 percent share of the generation market.

“This transaction gives us a superb platform for value- enhancing growth outside our markets in Europe,” Johannes Teyssen, chief executive officer of E.ON, said today in a statement. “In Sabanci, we’ve found a partner that has unique market knowledge and goals that are as ambitious as ours.”

The interests in the German hydroelectric plants represent 351 megawatts of generating capacity and the deal will give Verbund a 100 percent holding in the units.

The deal is valued “around mid-value between 1 billion euros and 2 billion euros,” Teyssen said in an interview today.

Reinforce Position

“With this transaction, Verbund reinforces its position in Germany, its most important international market, and in its core technology hydropower generation,” the Austrian company said in a statement yesterday.’

EON and Sabanci will invest as much as 4 billion euros in Enerjisa to meet the power capacity target, Selahattin Hakman, chairman of the Istanbul-based joint venture, said today in an interview in Istanbul.

“Enerjisa plans investment in the Turkish government’s asset sales in power grids and power plants,” Hakman said. The venture will bid in a government auction for the operational rights to the Gediz power grid in western Turkey, he said.

Enerjisa, which currently has 1,700 megawatts of power capacity in Turkey, also plans to undertake wind and solar power investments in Turkey as well as expand abroad, Hakman said.

The joint venture, which aims to increase the number of power grid customers to 6 million from 3.5 million at a grid around the capital city of Ankara, may consider bidding in auctions for Istanbul’s Asian side and southern Turkish Toroslar grids should it fail to win the Gediz grid, Hakman said.

The deal is scheduled to close in the first quarter of 2013 and is subject to an antitrust review, according to the companies.

Second Time

The agreement marks the second time Verbund, Europe’s fourth-biggest producer of hydropower, has taken over E.ON plants in Germany. It bought 13 hydropower stations along the Inn River in southern Germany for more than 1 billion euros in 2009.

Enerjisa Enerji, Turkey’s second biggest non-state energy producer, was set up last year with 3.5 billion lira ($2 billion) of capital after a reorganization of businesses owned by Verbund and Sabanci Holding.

Enerjisa, which had 3.7 billion liras of sales in 2011, has about 1,700 megawatts of generating capacity, through its production unit Enerjisa Enerji Uretim AS. The company has 2,000 megawatts of capacity under construction and 1,500 megawatts under development, according to E.ON.

To contact the reporters on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net; Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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