Lawyers from Gide Loyrette Nouel have acted as legal counsel to Total on its acquisition of two combined cycle plants and the Spanish business of Portuguese electric utilities company Energias de Portugal (EDP), for EUR 515 million.
King & Wood Mallesons provided legal advice to Lisbon-headquartered EDP.
The acquisition follows French oil and gas firm Total’s recent purchase of Tullow Oil’s entire interest in Ugandan project , the Lake Albert Development Project.
The EDP acquisition includes two groups of its combined cycle plant in Castejón, as well as its entire Spanish consumer commercial business. The agreement also includes a 50% interest in EDP’s Madrid-based electric utility company, CHC Energia, initially formed through a joint venture.
For Total, the acquisition coincides with its own disposal of United Kingdom North Sea non-core assets to electricity and gas company, NEO Energy, an agreement which took the form of renegotiated terms, symbolic of recent volatility in the energy industry.
It is expected that the transaction, which forms part of EDP’s strategic plan for 2019 to 2022, will close in the second half of this year, subject to receiving the relevant regulatory approvals.
The sale was initially announced by EDP in March last year, with the rationale being a reduction in thermal generation assets, which will lessen the company’s exposure to a price-volatile wholesale market.
In turn, EDP hopes to improve its financial performance. A year on from announcing its strategic plan, it has already achieved 65% of its total planned asset disposals, which has reduced its net debt figure.
“After this agreement, EDP will maintain more than 95% of earnings before interest, taxes, depreciation, and amortisation in Spain, which is one of our strategic markets and where we will continue to invest in the generation, networks and supply of renewables, both in the business-to-business segment and in the new downstream segment,” explained EDP’s CEO, António Mexia, in a statement.
He continued: “This transaction is fully aligned with our commitment to lead the energy transition, providing EDP with additional flexibility as we build a more sustainable future – a future that will be electric.”
The disposal comes at a time when interest in the renewable energy sector is rising .
