EON, Sabanci Said to Hire Goldman for Turkey Asset Sales

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EON SE, Germany’s largest utility, and partner Haci Omer Sabanci Holding AS hired Goldman Sachs Group Inc. to explore the sale of power assets in Turkey, people with knowledge of the matter said.

The companies are seeking about $1 billion from the sale, which may include direct stakes in production and distribution assets or in the company operating them, the people said, asking not to be identified as the plans are private. The sale could be for a minority stake, said the people.

EON on Nov. 30 announced plans to break itself up, spinning off fossil-fuel power plants into a separate company to focus on renewable energy. The reorganization is the most radical response yet to Germany’s switch to wind and solar power, a shift that has led nuclear reactors to close and undermined power prices, eroding traditional utilities’ profits.

Enerjisa Enerji AS is equally owned by the Dusseldorf, Germany-based utility and Sabanci. It produces 2,800 megawatts of power in Turkey, with a goal of boosting that to 5,000 megawatts by 2020. It also operates three power grids covering a population of about 16 million, according to its website.

Sabanci rose as much as 2.8 percent to 9.53 liras, the most since March 17, and was trading at 9.45 liras as of 12:29 p.m. in Istanbul. EON rose as much as 1.4 percent to 14.845 euros, its highest intraday price since Dec. 8, and traded at 14.785 euros at 11:33 a.m. in Frankfurt.

‘Strategic Business’

“The partial divestment may crystallize the value of Enerjisa, strengthen financial leverage of the asset and improve the cash position” of Sabanci, Mustafa Kucukmeral, an analyst at Is Investment in Istanbul, said in an e-mailed note.

Enerjisa’s owners plan an initial public offering of the company, Sabanci Holding Chief Executive Officer Zafer Kurtul said March 3, declining to say when the sale could take place. Earlier, the partners had said an IPO was planned for 2016.

“Energy is a strategic business line for Sabancı,” Chief Financial Officer Baris Oran said in an e-mailed response to questions. “We continuously work on options to improve the financial and operational performance of the business.”

Joseph Stein, a spokesman for Goldman Sachs in London, declined to comment, as did EON spokeswoman Sabine Meixner.

EON became a partner with Sabanci in Enerjisa after buying Verbund AG’s stake for about 1.5 billion euros ($1.6 billion) in 2012 in exchange for EON’s interest in eight hydroelectric power plants in Germany. EON is also working with Bank of America Corp. on the potential sale of its North Sea assets, people with knowledge of the matter said March 5.

Enerjisa paid $1.23 billion to take over the operational rights of the Ankara grid, known as Baskent, for 30 years in 2008. It also purchased rights of the same duration to the grid on Istanbul’s Asian side, known as Ayedas, for $1.3 billion, and for the Adana region, known as Toroslar, for $1.73 billion in auctions in 2013.

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