Abu Dhabi’s Taqa, the United Arab Emirates’ national energy company, has approached Naturgy Energy Group SA, the largest shareholder, to revive its bid for a stake in the Spanish energy company worth 24 billion euros ($26 billion), sources familiar with the matter said, Bloomberg has reported. Mohamed Hassan Alsuwaidi, chairman of the UAE’s leading energy company, visited Spain and met with the head of CriteriaCaixa SA to discuss a potential deal, according to the people, who spoke on condition of anonymity because the talks are private. Alsuwaidi is also the UAE’s minister of investment.
Criteria, which owns 26.7 percent of Naturgy, has indicated it is open to talks if two conditions are met: that Taqa does not seek a majority stake and that there are no diplomatic conflicts with Algeria, where Naturgy has a large business, one of the sources said. Criteria would not agree to a deal in which it would become a minority shareholder, one of the sources said. Discussions are ongoing and there is no certainty that Taqa and Criteria will go ahead with the deal, the people said, speaking on condition of anonymity to discuss confidential information. Taqa, Criteria and Naturgy declined to comment.
Criteria and Taqa
Criteria and Taqa tried to join forces last year to buy out a group of Naturgy shareholders. The talks broke down largely over differences over who would control the utility. Naturgy shareholders are set to hold their annual meeting on Tuesday and vote on a board proposal to buy back a majority stake of up to 10% of its capital. The offer is aimed at increasing the liquidity of the shares, and the company said major shareholders have already committed to participating.
Naturgy has been struggling for several years with an extremely complex shareholder structure, in which four different groups each own at least 15% of the shares, but with different objectives. This has both hampered the performance of the shares, as the company has lost liquidity, and limited management’s ability to invest and make deals. The situation has also raised concerns from the Spanish government, which views Naturgy as a strategic company and has the power to block any deal. In February, a number of them already declared their support for the purchase of a stake in Taqa. Relations with Algeria are also a central factor.
United Arab Emirates and Algeria
Naturgy owns two major gas pipelines that transport fuel from Algeria to Spain, although one has not been used for imports for several years. Sonatrach, the Algerian state gas company, owns 4.1% of Naturgy. Spain once had a diplomatic dispute with Algeria but has since mended ties. The UAE and Algeria also have a tense diplomatic balance. Criteria, Spain’s largest investment group, has had decades-long ties with Naturgy.
The buyers, CVC Capital Partners Plc and BlackRock Inc. Global Infrastructure Partners, own about 21% of the Spanish utility and have previously signaled their willingness to exit. Australian IFM Global Infrastructure LP, which owns 16.9% of Naturgy, is looking to become a long-term investor but has run into criteria on how to run the company. Taqa is eyeing overseas deals as the United Arab Emirates seeks to diversify its portfolio. The firm is among the contenders evaluating an investment in the German government’s stake in energy company Uniper SE.