The deal that would put Czech company Energetický a Průmyslový Holding (EPH) in the big league of Central European and even European power companies appears on the verge of being realized.
EPH confirmed out of Prague Tuesday the news out of Italy that it has basically sealed the overall deal to buy up ENEL’s 66 percent stake in Slovakia’s biggest electricity company Slovenské Elektrárne. It could be signed by the two parties by the end of the year. Slovenské Elektrárne produces around 75 percent of Slovakia’s electricity with around half of that power coming from its nuclear plants.
This is the biggest step so far in EPH’s rapid odyssey from the owner of heat and power plants in the Czech Republic, to coal mines in Germany, and gas pipeline assets and electricity distribution assets in Slovakia, as well as scattered power plants in Hungary, Italy, and Britain. The transformation has taken place in just over half a dozen years.
The deal with ENEL should see half of the Italian giant’s 66 percent handed over more or less immediately. The second half of its shares will be transferred when the Mochovce nuclear reactors 3 and 4 are completed, a deadline now expected to be met by the end of 2017.
EPH though is keeping most of the details of the ENEL deal secret for now. One of the biggest questions is how the new triumvirate that will evolve in the short term between EPH, ENEL, and the Slovak government work out in practice. The Slovak government has a 34 percent stake in Slovenské Elektrárne.
The second is whether the Slovak government will continue to see the possibility of boosting its share in Slovenské Elektrárne to over 50 percent. Minister of the Economy Vazil Hudák indicated in an interview with a local energy server that the government is looking to make sure that the option to boost its shareholding is maintained. Whether this will be in the EPH-ENEL deal or as part of some separate shareholder pact between EPH and the government still has to be seen. And Hudák added that the government is also looking for firmer assurances from ENEL that it will remain the shareholding primarily responsible for completing the Mochovce units.
After previous spats between ENEL and the Slovak government over cost overruns and delays, the budget for completing the two reactors has been stable for some time now and most experts expect that it will have to be hiked higher again before the reactors are both producing power some time at the end of 2017 or start of 2018.
With the latest mega acquisition virtually in the bag, there is also the question whether EPH will continue to be in the running for the coal mining, coal-fired and hydro plants of Vattenfall in Germany. Initial offers are supposed to be delivered by December 21 so it won’t be too long to wait for that answer. State-controlled ČEZ should also declare at the same time whether it will be a contender for the same package of power assets.
One of the hallmarks of the rise of EPH and its lead actor Daniel Křetínský is that there is always cheap money out there from banks and other institutions for more acquisitions. Picking up both Slovenské Elektrárne and Vattenfall’s German assets would appear to be stretching that maxim to the limits.
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