Business
Britain’s SSE rebuffed EDP proposal to merge, sources say
Global Banking & Finance Review®
Company
By Andres Gonzalez, Sarah McFarlane and Sergio Goncalves
By Andres Gonzalez, Sarah McFarlane and Sergio Goncalves
LONDON (Reuters) – Portugal’s main power utility EDP initiated merger discussions with London-listed peer SSE earlier this year, but talks did not progress, three people familiar with the matter told Reuters.
The proposed deal would have created one of Europe’s largest utilities, with the companies’ combined market value exceeding $44 billion, though still smaller than leaders Iberdrola and Enel.
EDP made the approach before the summer, seeking to create a regionally broader asset portfolio, two of the people said. SSE’s management declined the proposal, preferring to focus on growing the company independently, the people added.
They did not give details of the proposal.
Talks ended around June, one of them said, speaking on condition of anonymity because they were not authorized to speak publicly.
EDP declined to comment. SSE said it does not comment on market speculation.
In May, EDP’s CEO Miguel Stilwell d’Andrade initiated discussions with SSE’s leadership, including holding talks with SSE’s CEO Alistair Phillips-Davies and Chair John Manzoni, a second person said.
It is not clear whether EDP might revisit the proposal.
SSE shares gained as much as 3% after the Reuters report, while EPD shares gained 1.7%.
The talks come amid an upswing in power sector dealmaking, reaching almost $110 billion worldwide as of Sept. 24 from 853 transactions, according to LSEG data, up 43.5% from the previous year.
These have largely been smaller deals, however. In one of the larger deals attempted earlier this year, talks fell apart between Abu Dhabi’s TAQA and Criteria over the acquisition of Naturgy, the second largest Spanish utility by market value.
EDP, which has invested in renewable energy in recent years, owns a 71% stake in EDP Renovaveis. EDP Renovaveis is the world’s fourth-largest renewable energy producer, operating in 28 countries across Europe, Asia and the Americas.
EDP’s market capitalisation of $17.5 billion is significantly lower than SSE’s, which was $27.05 billion as of Tuesday.
By enterprise value EDP is the larger of the two companies at $46 billion, according to LSEG data.
($1 = 0.9168 euros)
(Reporting by Andres Gonzales and Sarah McFarlane in London and Sergio Goncalves in Lisbon. Editing by Anousha Sakoui, Elisa Martinuzzi, Mark Potter and Tomasz Janowski)
Market capitalisation is the total market value of a company's outstanding shares, calculated by multiplying the share price by the total number of shares. It reflects the company's size and is used to compare it with others in the industry.
Mergers and acquisitions refer to the processes where companies consolidate through various types of financial transactions, including mergers, acquisitions, and takeovers. These strategies are often used to achieve growth, diversification, or competitive advantage.
Renewable energy is energy derived from natural processes that are replenished constantly, such as sunlight, wind, rain, tides, waves, and geothermal heat. It is considered more sustainable compared to fossil fuels.
Enterprise value is a measure of a company's total value, often used as a comprehensive alternative to market capitalisation. It includes market capitalisation, debt, and excludes cash and cash equivalents.
Explore more articles in the Business category
