Pitch Best Deal 2020: Mitsubishi Corporation – Eneco
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Name of the deal: Mitsubishi Corporation and Chubu Electric Power acquire Eneco Group
Date: Announced 25 November 2019, closed 25 March 2020
Published value: €4.1 billion
Buyer(s): Mitsubishi Corporation and Chubu Electric Power Co., Inc.
Target: Eneco Group N.V.
Seller: 44 Dutch municipalities
M&A Database: View more details of this deal
Involved firms and advisors buy side:
Barclays (M&A Advisory), EY (Consultancy and Financial Due Diligence), Clifford Chance Amsterdam (Legal Advisory Corporate M&A), PwC (Consultancy)
Involved firms and advisors target:
ABN AMRO (M&A Advisory), Meijburg & Co Belastingadviseurs (Tax Advisory), KPMG (Financial Due Diligence), Eneco Group (In house Corporate M&A), CorporateWise (Legal Advisory Corporate M&A), Stibbe (Legal Advisory Corporate M&A), CFF Communications (PR Consultancy), Confidant Partners (PR Consultancy), DNV GL (Consultancy)
Involved firms and advisors sell side:
Aperghis & Co (M&A Advisory), Capitium (M&A Advisory), Citigroup (M&A Advisory), De Brauw Blackstone Westbroek (Tax Advisory and Legal Advisory Corporate M&A), ING Bank (M&A Advisory), AXECO (M&A Advisory), Nautadutilh (Legal Advisory Corporate M&A)
Pitch
Brief description deal / Deal outline:
Eneco is the Netherlands-based integrated energy company engaged in the production, trade, transmission and supply of gas, electricity and heat and related services, headquartered in Rotterdam. In Western Europe, Eneco is a market leader in renewable energy with top 3 retail positions in the Benelux and Germany. Furthermore, Eneco is a frontrunner in innovative customer solutions and operates as an integrated energy company, combining renewable energy generation and supply. Above all, Eneco with its long history as a renowned brand, is a household name in the Netherlands, truly embedded in Dutch society.
A consortium led by Mitsubishi Corporation acquired all shares in Eneco from Eneco shareholders for a total equity value of EUR 4.1 billion. In the consortium of Mitsubishi Corporation and Chubu, Eneco has found new shareholders that fully endorse, strengthen and contribute to the further national and international development of Eneco's sustainable strategy.
The Committee of Selling Shareholders (representing 42 of the 44 Dutch municipal shareholders that owned 100% of Eneco Groep N.V. (“Eneco”)) completed the sale of the shares in Eneco to a consortium of Mitsubishi Corporation and Chubu Electric Power Co., Inc.
Why should this deal win the Award for Best Deal 2020?
Eneco was owned by 44 Dutch municipalities. The privatisation of Eneco was structured through a highly competitive auction process. The shareholders' committee, the board of management and the supervisory board of Eneco completed an extensive privatisation process in a short timeframe, with consideration for the interests of all stakeholders.
It is a High-profile transaction that should win because of the interplay of Eneco’s company characteristics, privatization rules (Public tender), diverse bidder landscape, transaction process and complexity.
Deal rationale:
The deal paves the way for further expansion of Eneco internationally, accelerating the implementation of its sustainability strategy and thereby leading the energy transition. Furthermore, MC will transfer part of its offshore wind activities to Eneco, significantly strengthening Eneco’s position in this market. In addition, the Japanese industrial giant has committed a EUR 1.0bn loan for Eneco’s long term investments.
What is the impact of this deal for the company?
In the consortium led by Mitsubishi Corporation, Eneco has found new shareholders that fully endorse, strengthen and contribute to the further national and international development of Eneco's strategy. Having the consortium as new shareholders will mean that Eneco remains intact and independent and that the employment will remain unchanged.
The consortium will provide Eneco additional financial strength, enabling Eneco to further build out its potential as a successful customer-centric utility leading the energy transaction in Benelux, Germany and new markets. Expansion of offshore wind activities due to the Mitsubishi transferring part of its offshore wind activities to Eneco (Over 400 megawatt). Furthermore, strengthening of Eneco’s credit profile on the back of the financial strength of the new shareholders. Eneco will maintain its brand names and its business locations including its HQ in Rotterdam. In addition, no redundancies are expected as a result of the transaction.
- Employees: No redundancies as a result of the transaction.
- Eneco: Transaction allows Eneco to further accelerate its leading position in renewable energy both in the Netherlands and the rest of Europe.
- Former shareholders: Transaction gave opportunity for the municipalities to monetize their shares and to use their proceeds for the benefit of society.
- New shareholders: he transaction provided a solid platform to enter the European energy market.
What is the impact of this deal for the direct stakeholders?
The consortium led by Mitsubishi Corporation made the best offer for the shareholders and all other stakeholders of Eneco, including its employees, with the best terms and conditions, including price, and deal certainty.
What is the impact of this deal on society?
With the Consortium, Eneco is able to further expand on the execution of its sustainable strategy, aimed at growth of sustainable energy assets, energy supply and innovative services. Both by way of autonomous growth as well as acquisitions. Eneco will become the centre of all energy-related activities of Mitsubishi Corporation in Europe. Mitsubishi Corporation intends to transfer part of its offshore wind activities to Eneco, in total more than 400 megawatt. Through Mitsubishi Corporation, Eneco will get access to new offshore wind markets in the United States and Japan. Vice versa, Mitsubishi Corporation and Chubu will obtain insight and experience in improving sustainability of the energy supply in their home markets. Between mid-2019 and mid-2024, Eneco will have invested at least EUR 1 billion in renewable generation assets in the Netherlands, Germany, and Belgium.
What was most complex about this deal?
The deal was particularly complex due to the wide variety of stakeholders and the 44 Dutch municipalities being shareholders of Eneco. The transaction was particularly complex from a process management perspective, considering the huge team at Eneco involved, the many shareholders involved and the hundreds of advisors involved.
Perceived as one company, Eneco actually comprises very different and complex activities (supply, generation, trading) across multiple geographies, amongst other resulting in a close to 500 pages information memorandum as a starter.
Everything considered, a very lengthy sales process, basically commencing in 2017 with the unbundling of Eneco into a regulated electricity and gas distribution company (Stedin) and an integrated renewable energy company (Eneco). After the unbundling, a number of shareholders indicated they wanted to sell their shares in Eneco. In 2018, the decision was taken to privatise Eneco. A dual track process was initiated, resulting in a controlled auction process as preferred route for the privatisation, in order to safeguard the interests of all stakeholders.
In general, the public nature of Eneco ensured ample media coverage throughout the process, not always benefitting the process. Quite a hurdle in that sense was the announcement of the Central Works Council to start an Enterprise Chamber investigation into the dealings around the privatisation process and decision to appoint Ruud Sondag as successor of Jeroen de Haas, which led to the eventual suspension of three of the six supervisory board members.
Late 2018, the sale process was launched with a pre-qualification round addressing acquisition rationale and financial strength. Eneco being a market leading innovative, renewable energy company attracted significant interest from high-profile potential buyers. Due to the privatisation being in the public eye for quite some time there was a lot of media attention and speculation on who potential buyers could be.
Several parties publicly indicated their interest, including Shell, Rabobank, Groene Consortium (Cees Koolen) and Den Haag Fossielvrij.
After a four-month due diligence process the consortium of MC and Chubu submitted the most compelling offer, both from a strategic and financial point of view, with Eneco becoming the European centre for all their energy-related activities.
