OMV and VERBUND reach agreement on transaction contract: VERBUND acquires 51% of shares Gas Connect Austria GmbH.
The contract signing will take place today; closing is subject to regulatory approval and is expected in the first half of 2021.
OMV, the international, integrated oil and gas company headquartered in Vienna, and VERBUND, Austria's leading electricity company and one of the largest hydropower producers in Europe, today announced the sale of the 51% interest in Gas Connect Austria GmbH by OMV to VERBUND. The supervisory boards of OMV and VERBUND have approved the transaction. The contract signing will be held in the course of the day.
The purchase price agreed for the 51% interest of OMV in Gas Connect Austria GmbH amounts to EUR 271 mn. VERBUND will additionally assume the outstanding liabilities of Gas Connect Austria GmbH to OMV on the closing date in 2021. As of December 31, 2019, these liabilities totaled EUR 165.9 mn. According to the terms of the transaction, total cash consideration paid by VERBUND to OMV will be equal to EUR 436.9 mn, subject to the amount of liabilities as per closing. The purchase price implies an enterprise value for Gas Connect Austria GmbH (for 100% of the debt-free company) of EUR 980 mn.
VERBUND does not expect the transaction to have any impact on the annual results forecast for the current business year 2020 as closing will not take place before the first half of 2021 in light of the lengthy procedures to secure the requisite regulatory approvals and permits.
This transaction will reduce OMV's debt by more than EUR 570 mn, which will have a positive impact on OMV's gearing. This debt relief is based on the transaction price for 51% of shares in Gas Connect Austria GmbH plus the shareholder loan that has been consolidated in full by OMV until now. In addition, VERBUND will assume Gas Connect Austria GmbH's outstanding cash-pool liabilities to OMV at the time of closing in 2021.
OMV is thereby pursuing its strategy of exiting the regulated gas transport business and engaging in proactive portfolio management to continue on its profitable growth course. Gas trading and gas storage will remain an important part of the OMV portfolio.
As an owner and operator of critical infrastructure, for VERBUND the acquisition of the shares in Gas Connect Austria GmbH not only means an improvement in the business profile, but will also have a positive impact on performance indicators - especially in terms of the optimal positioning for Sector Coupling with the option for developing a hydrogen business in the future. When combined with the renewable generation portfolio of VERBUND, the outstanding transport infrastructure of Gas Connect Austria GmbH can make a crucial and valuable contribution to meeting climate targets.
'In an increasingly volatile environment, this transaction strengthens our share in the regulated business and ensures stable earnings contributions,' said Michael Strugl, Deputy Chairman of the Management Board of VERBUND. 'VERBUND operates the Austrian power transmission grid and is experienced in operating regulated infrastructure. As a bridging technology, gas will continue to play a key role on the path to a renewable energy system. The importance of the gas network will grow significantly in future as it will increasingly be used to transport green gases such as green hydrogen. In the long term, we see a global hydrogen economy, one in which large quantities of energy need to be transported internationally. This makes the purchase of Gas Connect Austria a key strategic step for VERBUND'.
'We are delighted to have reached an agreement with VERBUND. This marks the first major step in our previously announced 2-billion-euro divestment program and the sale will have a debt-relief impact for OMV of more than 570 million euros', said Rainer Seele, Chairman of the Executive Board and CEO of OMV.
VERBUND is Austria's leading electricity company and one of the largest hydropower producers in Europe. The Group generates around 95 percent of its electricity from renewable energy, predominantly hydropower. VERBUND trades electricity in twelve countries and in 2019 generated annual revenue of approximately EUR 3.9 billion with around 2,800 employees. Along with its subsidiaries and partners, VERBUND's activities range from the generation of electricity to transport and international trading and sales. VERBUND has been quoted on the Vienna Stock Exchange since 1988; 51 percent of its share capital is held by the Republic of Austria.
OMV produces and markets oil and gas, innovative energy and high-end petrochemical solutions in a responsible way. With Group sales of EUR 23 bn and a workforce of around 20,000 employees in 2019, OMV Aktiengesellschaft is one of Austria's largest listed industrial companies. In Upstream, OMV has a strong base in Central and Eastern Europe as well as a balanced international portfolio, with Middle East & Africa, the North Sea, Russia and Asia-Pacific as further core regions. Daily average production was 487,000 boe/d in 2019. In Downstream, OMV operates three refineries in Europe and owns a 15% share in ADNOC Refining and Trading JV, with a total annual processing capacity of 24.9 mn tons. Furthermore, OMV has a 36% participation in Borealis, one of the world's leading producers of polyolefins. The Company operates about 2,100 filling stations in ten European countries. OMV runs gas storage facilities in Austria and Germany; its subsidiary Gas Connect Austria GmbH operates a gas pipeline network in Austria. In 2019, gas sales volumes amounted to around 137 TWh. Sustainability is an integral part of OMV's corporate strategy. OMV supports the transition to a lower-carbon economy and has set measurable targets for reducing carbon intensity and introducing new energy and petrochemical solutions.
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