- Oil peers Shell, Statoil have also invested in renewables
- Saft makes cells for transport, civil and military electronics
Total SA agreed to buy French battery maker Saft Groupe SA in a 950 million-euro ($1.1 billion) deal, ratcheting up investments in clean energy by one of the world’s largest oil companies.
Saft will become Total’s “spearhead in electricity storage,” Patrick Pouyanne, chief executive officer of the Courbevoie, France-based oil producer, said Monday. The purchase allows Total to speed up its expansion in renewables, which began in 2011 with its purchase of solar-panel maker SunPower Corp.
The market for energy storage is growing as companies and governments seek to integrate intermittent generation from solar and wind farms into the grid and provide a more stable source of supply. Total, which has pledged to invest $500 million a year in renewables, is among European oil and gas majors plowing funds into the industry as countries seek to meet growing energy demand with cleaner electricity and fuels.
Saft designs and makes nickel and lithium batteries for industries including transportation and civil and military electronics. Total’s 36.50-euro-a-share offer represents a 38.3 percent premium to Saft’s closing price on May 6, the companies said in a joint statement. Saft’s supervisory board unanimously approved the friendly takeover bid.
“The acquisition clearly aligns with Total’s strategy to strengthen its position in the clean-energy and power sector, following on from the 2011 acquisition of SunPower,” said Logan Goldie-Scot, an analyst at Bloomberg New Energy Finance. “This will give the battery manufacturer much greater clout in energy-storage tenders, where scale and size of balance sheet is becoming increasingly important.”
Total said last month it was combining its business units for renewables, gas, power and energy efficiency as the growth of those markets prompted a “value chain approach to electricity.”
The move followed wind-farm investments by competitors Royal Dutch Shell Plc and Norway’s Statoil ASA, while France’s Engie SA snapped up solar developer Solairedirect SA last year. Even Saudi Arabian Oil Co., the largest crude exporter, is studying expansion in solar power in preparation for a world after oil.
Total’s offer values Saft at nine times its 2015 reported earnings before interest, taxes, depreciation and amortization, representing “a significant control premium compared to recent valuation multiples in the battery industry,” according to the statement.
“While not a transformational transaction for Total, this will likely surprise most investors who may question the premium in the context of medium-term benefits to Total,” Marc Kofler, an analyst at Jefferies International Ltd, said in an e-mailed note.
Messier Maris & Associes is advising Total on the transaction and Goldman Sachs Group Inc. is working with Saft.
Total rose 0.2 percent to 43.01 euros in Paris trading at 12:48 p.m. local time. Saft shares weren’t trading.