Ireland Scraps Bord Gais Unit Sale as Blackstone Falls Short

Ireland’s government abandoned the sale of the retail and power generation unit of its state-owned gas company as three final bids fell short.

None of the final-round bids lodged on Nov. 25 for Bord Gais Energy, a unit of Bord Gais Eireann, were acceptable, Energy Minister Pat Rabbitte said in an e-mailed statement today.

“I have been clear from the outset of the offer process that Bord Gais Energy would only be sold if a sale price was achieved which fully recognizes the inherent value of the business,” Rabbitte said.

Blackstone Group LP and Northern Ireland’s largest power company Viridian Group Limited submitted final bids. The unit had also drawn interest from Centrica Plc, the U.K.’s largest power company. The government shelved the sale, agreed as part of the country’s 2010 bailout program, as the state prepares to exit the rescue package next month.

“The decision speaks for the confidence the government now has to say no to an unfavorable deal,” said Alan McQuaid, chief economist at Merrion Capital in Dublin. “The government had always made it clear that this wouldn’t be a fire sale.”

Bord Gais will now separate its networks and energy division, which includes the power generation and retail operations, in line with European energy law, Rabbitte said. He said future options for the energy business will be reviewed.

Spokesmen for Blackstone, Centrica and Viridian declined to comment on the process. Viridian, backed by Australia’s Macquarie Group Ltd., was the only bidder to pitch above a 1 billion-euro reserve in an earlier round of offers in September, people familiar with the matter said on Oct. 10.