Total SA (FP.FR, TOT) Tuesday confirmed it entered exclusive talks with a consortium led by Electricite de France SA (EDF.FR) to sell its natural-gas transport and storage unit TIGF, for a price valuing the company at 2.4 billion euros ($3.26 billion).
TIGF was put up for sale by the oil and gas major last autumn as part of a wider strategy to sell as much as EUR20 billion of assets by 2015 to help boost its cash flow, and finance substantial investments.
TIGF was initially valued at between EUR2.5 billion and EUR3 billion, according to analyst estimates, but the recent fall in gas prices reduced estimates.
The unit attracted much interest as the gradual demise of nuclear energy in Europe following the Fukushima catastrophe at a time of stricter carbon-emission standards rendered natural gas the best option.
Gas also allows for consistent power production when renewable energies, currently being developed all around Europe, depend on the weather, making them only "intermittent" and unable ensure a stable level of electricity, making a back-up power source necessary.
Further, TIGF or Transports Infrastructures Gaz France, is viewed as a stable investment with activities that are regulated, granting steady returns. Total asked potential buyers to protect jobs and working conditions and maintain TIGF's headquarters in the southwestern town of Pau.
TIGF employs 500 people and generates EUR353 million a year in revenue. Initially, seven companies or consortia had expressed interest in TIGF but three weeks before the deadline to submit offers, which was set on Feb. 4 at 0700 GMT, only two bidders remained in the race.
The consortium led by EDF includes the Government of Singapore Investment Corp., and Italian energy company Snam SpA (SRG.MI). It was advised by Lazard Ltd. (LAZ) and Goldman Sachs Group Inc. (GS).
"The consortium selected, consisting of industry-leading operators and long-term investors, will support TIGF in its further development, while meeting the commitments made to TIGF's employees and partners," Christophe de Margerie, Chairman and CEO of Total, said in a statement.
CDC Infrastructure, a fully owned subsidiary of Caisse des Depots, led the second consortium that comprises AXA Private Equity, Credit Agricole SA's (ACA.FR) insurance unit Predica, Abu Dhabi Investment Authority and Belgium's natural-gas operator Fluxys Belgium SA (FLUX.BT).
EDF, which has a 20% interest in the consortium, would set aside its share of the assets in a special account as required by law, to finance the dismantling of nuclear reactors.
Total was keen to get the transaction done ahead of its fourth-quarter earnings release on Feb. 14, as investors are scrutinizing its compliance with its own financial commitments.
foxbusiness.com
TIGF was put up for sale by the oil and gas major last autumn as part of a wider strategy to sell as much as EUR20 billion of assets by 2015 to help boost its cash flow, and finance substantial investments.
TIGF was initially valued at between EUR2.5 billion and EUR3 billion, according to analyst estimates, but the recent fall in gas prices reduced estimates.
The unit attracted much interest as the gradual demise of nuclear energy in Europe following the Fukushima catastrophe at a time of stricter carbon-emission standards rendered natural gas the best option.
Gas also allows for consistent power production when renewable energies, currently being developed all around Europe, depend on the weather, making them only "intermittent" and unable ensure a stable level of electricity, making a back-up power source necessary.
Further, TIGF or Transports Infrastructures Gaz France, is viewed as a stable investment with activities that are regulated, granting steady returns. Total asked potential buyers to protect jobs and working conditions and maintain TIGF's headquarters in the southwestern town of Pau.
TIGF employs 500 people and generates EUR353 million a year in revenue. Initially, seven companies or consortia had expressed interest in TIGF but three weeks before the deadline to submit offers, which was set on Feb. 4 at 0700 GMT, only two bidders remained in the race.
The consortium led by EDF includes the Government of Singapore Investment Corp., and Italian energy company Snam SpA (SRG.MI). It was advised by Lazard Ltd. (LAZ) and Goldman Sachs Group Inc. (GS).
"The consortium selected, consisting of industry-leading operators and long-term investors, will support TIGF in its further development, while meeting the commitments made to TIGF's employees and partners," Christophe de Margerie, Chairman and CEO of Total, said in a statement.
CDC Infrastructure, a fully owned subsidiary of Caisse des Depots, led the second consortium that comprises AXA Private Equity, Credit Agricole SA's (ACA.FR) insurance unit Predica, Abu Dhabi Investment Authority and Belgium's natural-gas operator Fluxys Belgium SA (FLUX.BT).
EDF, which has a 20% interest in the consortium, would set aside its share of the assets in a special account as required by law, to finance the dismantling of nuclear reactors.
Total was keen to get the transaction done ahead of its fourth-quarter earnings release on Feb. 14, as investors are scrutinizing its compliance with its own financial commitments.
foxbusiness.com
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