PARIS: France’s oil major is stepping up its power business, replicating the strategy of European peers as the global shift toward cleaner energy gathers pace.
Total SA agreed to buy Paris-based utility Direct Energie, adding 2.6 million electricity and gas customers in France and Belgium. The deal puts Total in a stronger position to lure households away from market leaders Electricite de France SA and Engie SA, and follows a similar utility acquisition by Royal Dutch Shell Plc in December.
While Big Oil’s move into the regulated European power market may not seem a natural fit today, it makes sense for a future in which fossil fuels are no longer dominant in the energy mix and consumers want charging points alongside gasoline pumps at fueling stations.
“We now have, among the European oil majors, an unexpected battle emerging for market share in western European gas and power,” said Rob West, an analyst at Redburn Europe Ltd. “It is fascinating.”
Total will buy 74.3% of Direct Energie from Impala SAS and other investors for 42 euros a share, it said Wednesday. Following the 1.4 billion-euro ($1.7 billion) transaction, Total will offer to buy out minorities at the same cost per share, a 24 percent premium to the three-month average stock price. The deal values Direct Energie at about 12.5 times projected 2018.
