PPC is gaining a foothold in the large and rapidly growing Romanian market with the acquisition of Enel Romania, the country’s largest renewable energy company and the second largest electricity supply and distribution company. At the same time, it becomes a strategic energy player in the region and gains access to an energy corridor that starts in Romania, crosses Bulgaria and ends in Greece.

With the completion of the acquisition in the third quarter of this year, PPC will add more than 130,000 km of distribution network, an additional 3.2 million new customers and 534 MW of existing renewables to its potential. In effect, it is doubling its production from renewables, facing regulatory risk due to the restrictions placed on it to reduce its domestic market share, and thereby seeking to increase its size.

Yesterday, PPC announced that it had signed a binding agreement with Enel to acquire all assets owned by Enel and its subsidiaries in Romania, for a total amount of approximately EUR 1.260 billion (based on a total business value of EUR 1.9 billion). ).

The agreement includes a provision for a possible additional payment (Earn-out) based on a specific mechanism in the event that Enel Romania’s trading activity acquires, over the next 2 years, a value exceeding that included in the remuneration of 66.5 euros/client. . This price is well below half the cost of acquisitions in the Greek market.

Accordingly, in the chains, PPC buys in Romania for about half the price Macquarie paid to acquire 49% of DEDDIE. The price of RES projects has also been set at a correspondingly low level compared to acquisitions in Greece.

It gains access to an energy corridor that starts in Romania, crosses Bulgaria and ends in Greece.

Financing

PPC intends to finance the acquisition through a combination of debt and equity on its balance sheet, of which €800m will come from debt financing already secured, available in the form of a €485m 5-year loan from Greek banks, as well as a bridge facility. of 315 million from international banks. The deal, according to PPC circles, will add EBITDA of around 300 million euros to the total EBITDA of the PPC group, and the synergy that will be created will be in the order of 200-250 million euros over 4 years. horizon. At the conclusion of the agreement, in addition to synergies, the high growth rates of the Romanian economy (2.5% this year, despite rising inflation and 3% in 2024) and the intensive industrialization of the country were also assessed, factors that are a guarantee of the future course of investment .

“This acquisition is fully in line with what we presented in November 2021 in the context of our strategic plan, which included our international expansion in the South East Europe region, and therefore Enel’s activities in Romania are an ideal choice both geographically and in terms of from a business perspective,” commented PPC President and Managing Director Yorgos Stasis, who knows Enel Romania very well from his tenure before taking over as head of PPC.

Enel’s exit from Romania, where it has been present since 2005, is linked to the company’s strategy to exit a number of countries in order to improve its balance sheet, which was heavily burdened during the energy crisis. The company aims to reduce its debt by 21 billion euros by 2024 and in this context has already sold assets in Chile as well as activities in Russia and is in the process of selling its portfolio in Greece, Argentina and Peru.

“With the sale of all our activities in Romania, we continue to implement the sales plan that was announced during the presentation of the Enel Strategic Plan for the period 2023-2025,” said Enel Group CEO and CEO Francesco Starace. The plan includes repositioning Enel in the higher growth countries where it has an integrated presence, namely Italy, Spain, USA, Brazil, Chile and Colombia. According to a statement from Enel, the deal is expected to have an overall positive impact on the group’s consolidated net borrowings of approximately €1.7bn, of which nearly €0.1bn will be in 2022 and the remainder in 2023, with a cumulative a negative effect for the period 2022-2023 on the reported net profit of the group of about 1.4 billion euros, of which about 0.6 billion euros for the issuance of a foreign exchange reserve, which will be registered in 2023.