Elia System Operator (Elia) and Industry Funds Management (IFM) have signed an agreement under which they will acquire the German regional transmission system operator, 50Hertz Transmission (50Hertz) from Vattenfall.
As per the terms of the agreement, IFM will own 40% and Elia will own a 60% stake and have operational control. The agreed enterprise value is EUR810m and the parties expect to complete the transaction for 50Hertz in the second quarter of 2010.
Elia said that this transaction represents a major step forward in the construction of the European electricity market that it has been supporting since its inception as an independent transmission system operator in 2001. It also fits in with its other strategic regional investments, including those in the Central Western Europe (Benelux, France and Germany) to develop a regional market.
IFM said that this investment complements their strategy of broadening its portfolio of assets in the European infrastructure sector.
Upon completion, this transaction will further enhance security of supply, due to the fact that Elia and IFM will pursue Vattenfall’s investment commitments, allowing 50Hertz to smoothly fulfill the German and European legal obligations.
These commitments include the construction of interconnectors and line extensions, which are a prerequisite for the reliable transmission of electricity primarily generated by wind turbines in low consumption coastal areas to high consumption regions further inland. These investments are also a vital requirement for achieving climate protection objectives.
Elia together with 50Hertz will further develop its edge in the European electricity market and participate in the integration of renewable and the construction of the future North Sea grid. While 50Hertz is already integrating the feed from a major amount of wind farms in its high voltage grid, Elia will reinforce its grid towards the seaside for the connection of future offshore generation.
Elia will finance the acquisition by a capital increase that is planned in the second quarter of 2010. The transaction is subject to approval from the EU’s competition authorities and the German federal Ministry of Economics and Technology.