M&A in Europe's energy sector has experienced significant fluctuations as industry players grapple with an array of challenges and opportunities. These include volatile markets and geopolitical tensions, not to mention the shift towards renewable energy and electric vehicles (EVs).
Buyers have become more selective about their buys due to rising debt prices. So far in 2023, the sector registered EUR 14.4bn worth of deals from 230 transactions. Volumes are 65% lower compared to the same period last year. These numbers are the lowest since the pandemic year which saw EUR 8.5bn worth of deals from 165 transactions.
The largest European deal in the sector is the announced acquisition of 50% stake in Spain-based solar power company X-ELIO by KKR & Co [NYSE:KKR] from Brookfield Asset Management [NYSE:BAM] for EUR 1.8bn. This was followed by Vauban Infrastructure Partners and Caisse des Dépôts’ (CDC) proposed joint acquisition of French district heating company Coriance for EUR 1.6bn.
More recently, Antin Infrastructure Partners' [EPA:ANTIN] announced a takeover of Opdenergy [BME:OPDE] which could be completed this year.
ReNewed focus
Despite falling M&A numbers, the energy industry's outlook remains strong, with an increasing emphasis on EV infrastructure and the energy transition likely to fuel dealmaking in the future. Much of this is driven by the EU's ambitious decarbonization targets.
The European Green Deal, a comprehensive plan aimed at making Europe the world's first climate-neutral continent by 2050, has set eye-catching targets for renewable energy production and the reduction of carbon emissions.
Bright future
As companies seek to navigate the challenges and opportunities presented by the transition to a low-carbon economy, M&A may be an important tool for achieving their strategic goals.
Grenergy [BME:GRE] and Solaria [BME:SLR] came into focus after the takeover of Spanish peer Opdenergy was announced, as flagged by Dealspeak's friends at the Morning Flash.
Meanwhile, Italian renewable energy specialist Fri-el Geo is on the market and collected preliminary offers for its greenfield geothermal project in April. The owners of Gravitricity are willing to exit their holdings in the UK-based energy storage company. And the sale of Basalt Infrastructure Partners' Italy-based energy platform Mareccio Energia is active.
I Squared Capital could exit its portfolio firm, Energia Group NI Holdings, an Irish energy company, which has a score of 72, according to Mergermarket's Likely to Exit (LTE) predictive algorithm*. Net4Gas, a Czech Republic-based gas transmission company, with an LTE score of 67 might be put up for a sale by current shareholders.
With a future this bright, dealmakers should reach for their shades.
