EdF to form partnerships with AEM and Enel

May 07, 2005 02:00 AM

The French state-owned electricity group EdF said it would move further into the Italian energy market and pursue a partnership with the leading Italian electricity supplier Enel following guarantees by authorities in Rome.
Electricite de France's board of directors "has decided to strengthen the group's presence in Italy through an equal footing partnership with AEM, the Milan electricity and gas utility, in the Edison Company," EdF said.

The decision was taken after the Italian government adopted a decree ending a freeze on EdF's voting rights in Edison.
"The Italian authorities guarantee to release EdF of its voting rights restriction in Edison and the certainty that no regulatory measures will be taken against EdF interests in Italy have made this decision possible," it said. "This agreement coming under the approval of the European Commission should be completed by an industrial partnership between EdF and the leading electrician in Italy, Enel, aimed at essentially enabling it to gain access once again to cutting-edge nuclear technologies through participation in the future EPR (European Pressurized water Reactor)."

French Finance Minister Thierry Breton welcomed the announcement, saying: "EdF has chosen the solution that best responds to its strategy and its interests. The choice of partnerships will allow for deeper energy cooperation between France and Italy. It is a success for the European energy sector."
EdF owns 18 % of Italenergia Bis, the holding company that controls 62 % of Edison, and also has a direct 2.34 % interest in Edison. But Italian authorities since 2001 had blocked EdF's voting rights at just two percent on the grounds that the French energy sector was not sufficiently open to competition. The French group had said that continued refusal by Rome would have resulted in EdF pulling out of the country, even though it is considered key to a strategy of recentering operations in Europe.

Italian ministerial sources said the government's decree contained threeconditions.
The decision, which modifies existing legislation, will remove limitations on voting rights in the Edison group provided that the purchaser is an EU company, is ready to be floated on a stock exchange and that the government of the company's origin is prepared to open its own energy sector and to allow cross shareholdings among energy companies.
EdF is in the process of being listed and has reached a preliminary agreement to let Enel enter the French market. The deal is currently being examined by European Union competition authorities.

Italian Industry Minister Claudio Scajola said he now expected Enel to sign an energy deal soon with EdF. The Italian cabinet decision "allows us to close, we hope in the coming days, an important agreement with an important partner like EdF," which will lead to "significant Italian investments in France."
EdF was now expected to take control of Italenergia Bis, possibly in conjunction with a partner, in a move that would give it a stake of more than30 % in Edison and would require it to place a bid for the remaining holdings.

EdF was expected to ask a consortium of Italian investors led by AEM to join it in acquiring Italenergia Bis. Press reports, speculating on the reasons for the cabinet decision, said the government preferred an alliance with EdF and feared that a withdrawal by the French group could open the way to participation by another energy giant, such as Endesa of Spain.
In addition Italy had been facing an EU sanctions threat for freezing the voting rights of public electricity and gas groups.

Source: PetroEnergy Information Network
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