Gazprom to submit final bid for Distrigaz Sud only

Russian gas giant Gazprom intends to submit a final binding bid for Distrigaz Sud natural gas distributor only, by July 15, when the bid submission deadline expires.

“The Gazprom board deems it expedient to submit the final binding bid on the acquisition of a 51% stake in the Distrigaz Sud SA gas distribution company of Romania independently, or in a consortium with the Dutch Marco Industries B.V.,” says the company’s press release, cited by Russian news agency RIA Novosti.

Marco Industries is controlled by US-based trader Marco International, which is closely connected to the Russian business environment. Marco owns the controlling interests in Alro Slatina and Alprom.

The relevant Gazprom departments have been instructed to prepare the documentation required for the deal, the quoted sources stated.

“The acquisition of a gas distribution company in Romania is part of Gazprom’s export strategy, which provides for establishing contact with the end users of Russian gas in Europe,” Gazprom officials say. The Distrigaz Sud issue will be put on the agenda of the company’s board of directors.

A comparison of the strategic potential and economic operation of the two companies, as well as analysis of the market and competition, prompted Gazprom to prioritise participating in the Distrigaz Sud privatisation.

Gazprom will receive financial consultancy from the ABN Amro Bank, while domestic law firm Racoti, Predoiu si Asociatii (Racoti, Predoiu & Co.) will handle legal advice.

The Romanian State, which owns 100% in the two gas distributors, is selling 30% in each of the two, directly to two separate investors, which will have to participate in a capital increase to acquire the remainder to achieve a final to 51%.

According to their regulated asset base, the two distributors are worth $650-$750 million. The investors would therefore have to pay around $480-$540 million to buy 51% in both companies.

The regulated asset base (RAB) is the Romanian authorities’ preferred indicator with regard to the privatisation of utility companies, which hold natural monopoly positions and depend on the level of the tariffs set by the regulatory authority, sources close the privatisation process explained.

Besides Gazprom, Wintershall will submit a final binding bid for the other distributor, Distrigaz Nord. Wintershall receives assistance from British law firm CMS Cameron McKenna.

Germany’s Ruhrgas and France’s Gaz de France announced they had chosen to submit final bids for both distributors on their own, even though an investor may not be a final purchaser of more than one Distrigaz company, so as to avoid the creation of a monopoly.

Italy’s Enel has similarly submitted expressions of interest for both of the Distrigaz companies. It has not announced whether or not it plans to continue like this, or will settle for just one of the two in its final bid.
adrian.mirsanu@zf.ro