Lithuania Buys EON Gas Stakes for Edge in Gazprom Talks

Lithuania bought German utility EON SE’s stakes in domestic natural-gas companies to strengthen its position in talks with Russia’s OAO Gazprom over a cut in the price for gas supplies.

State companies agreed to pay 508.6 million litai ($201 million) for EON’s 38.9 percent stakes in Lietuvos Dujos AB and its spun-off former transmission unit Amber Grid AB as well as its 11.8 percent of power distributor Lesto AB, Prime Minister Algirdas Butkevicius said today in Vilnius, the Lithuanian capital. The state’s voting power in the two gas companies now outweighs Gazprom’s, which owns 37.1% of both, he said.

The Baltic nation, which split control of its gas companies to meet European Union competition rules, is seeking to weaken the bargaining power of Gazprom, its only source of gas. For EON, the deal is a continuation of European asset sales that have raised more than 20 billion euros ($27.3 billion) since 2010 to cut debt and help finance expansion.

“These purchases strengthen Lithuania’s position in the pursuit of its strategic energy goals,” Butkevicius told reporters.

Below Market

Lietuvos Dujos shares fell 1.7 percent to 0.679 euro in Vilnius today, valuing the company at 197.4 million euros. Amber Grid plunged 5.5 percent to 0.807 euro, valuing it at 144 million euros. Lesto shares were unchanged today at 0.854 euro for a market capitalization of 515.8 million euros.

The total price paid for EON’s stakes is about 20 percent less than their market value, the prime minister said. EON also agreed to make a 43.9 million litai payment to the government that was foreseen in a 2002 agreement and which EON disputed until now, he said.

EPSO-G UAB owns 56.6 percent of Amber Grid after today’s transactions while Lietuvos Energija UAB owns 56.6 percent of Dujos and 94.4 percent of Lesto. The two state companies used their own and borrowed funds to pay for EON’s stakes, without tapping government cash, according to Butkevicius.

Public Offers

EPSO-G and Lietuvos Energija, as required by law, will make a public offer to buy all remaining shares of Dujos and Amber Grid, for which they’ve foreseen financing, Lietuvos Energija Chief Executive Officer Dalius Misiunas and EPSO-G Chief Executive Officer Virgilijus Poderys told reporters today.

The offers, based on the two stocks’ 6-month weighted average price on the Vilnius bourse, will be lower than the current market price, Poderys and Misiunas said.

The government for now plans to keep the increased utility stakes, according to Butkevicius. It may later consider selling some shares to the public, he said.

“Pension funds here have a huge amount of local money and we should create opportunities to invest more of it in the local capital markets,” Butkevicius said. “It’s too early now to talk about how we could do that.”

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