Mirant to end venture with German utility

Mirant will cash out of a high-profile investment in a German electric utility after four years, selling its stake to a partner for $ 1.6 bn. Mirant said it accepted an "unsolicited" buyout offer from Sweden's state-owned Vattenfall after more than a year of negotiations failed to combine the Berlin utility with Hamburg's main power supplier and two companies in eastern Germany.
That would have formed Germany's No. 3 power company. It was an "offer we couldn't refuse," Mirant CEO Marce Fuller said. Mirant will end up with $ 300 mm more than it paid for the company, before taxes. John Robinson, director of investor relations for the Atlanta-based company, said Mirant will come away from the sale of its 44.8 % stake in Berliner Kraft und Licht with $ 900 mm in cash, after paying off debt. At the end of the third quarter, the investment was valued at $ 700 mm, plus $ 600 mm in debt. Mirant, then a subsidiary of Southern Co. known as Southern Energy, first purchased a 26 % stake in the Berlin utility in 1997 from the Berlin government for $ 830 mm.

Last year the company spent an additional $ 400 mm to raise its stake in the utility known as Bewag to 44.8 %. Mirant had been negotiating with Vattenfall since the Swedish company purchased its stake in Bewag from E.ON, Germany's largest utility, last year. A court battle awarded Mirant and Vattenfall equal stakes.
But negotiations with Vattenfall to form the larger German power concern were halted in September when the parties were unable to come to terms. By picking up Mirant's stake in Bewag, Vattenfall will become the No. 3 German power supplier. Mirant will still have 200 employees in Europe, including offices in Amsterdam, The Netherlands, and Milan, Italy, and will hold onto a Berlin office, Robinson said.

The company runs an energy trading operation in Amsterdam, is investing $ 250 mm in a Norwegian power plant and plans power plant investments in Italy. Mirant also owns a 49 % stake in a British power distribution firm. "Mirant remains committed to furthering business interests in Germany and other European markets," Fuller said.
"We will continue to take steps toward building an integrated energy business in Europe much like our highly successful US model, which combines ownership of power generation and natural gas assets with energy marketing and risk management expertise."