Eni and Snam have reached an agreement for Eni to sell a 49.9% (directly and indirectly held) share in certain firms that operate two groups of international gas pipelines connecting Algeria and Italy to Snam.
The onshore gas pipelines going from the Algerian and Tunisian borders to the Tunisian coast (TTPC) and the offshore gas pipelines linking the Tunisian coast to Italy (TMPC) are included in the transaction’s perimeter.
Eni will give its complete ownership interests in the two pipelines to a newly established Italian company (NewCo), in which Eni will retain a 50.1 percent share, while the remaining 49.9% [2] will be sold to Snam for a purchase price of 385 million euros, according to the deal. Snam will cover the cost of the acquisition with its own funds.
The acquisition will generate synergies between the parties’ respective areas of competence in gas transportation on a vital route for the security of natural gas supply in Italy, allowing for possible hydrogen value chain development projects from North Africa.
“This transaction allows us to free up additional resources to utilize on our energy transition route while keeping the management of a vital infrastructure with Snam to assure the security of natural gas supply to the country,” said Eni CEO Claudio Descalzi. Gas will play a critical part in the transition of energy systems to zero-emission models, thus it’s critical to keep the supply of this resource available and diverse.”
“This transaction consolidates Snam’s essential position in Italy’s security of supply as well as in energy transit from the Mediterranean area,” stated Marco Alverà, CEO of Snam. Snam is linking its infrastructure to North Africa with this deal, which represents a major location for gas supply to Italy as well as a forward-looking hydrogen development. North Africa might become a centre for solar energy and green hydrogen production in the future.”
Eni’s overall aim to optimize its portfolio and drive growth in sectors associated to the energy transition is supported by this deal. Snam will benefit from its strategic location on a natural gas supply route to Italy, as well as the chance to assist possible hydrogen value chain projects using natural resources in North Africa.
The agreement also includes an earn-in and earn-out mechanism based on the income earned by the target firms. In 2020, the target firms made a net income of roughly 90 million euros (100 percent of Eni’s equity).
On the basis of equal governance principles, Eni and Snam will exercise joint control of NewCo, and both firms will merge NewCo using the equity approach.
The transaction is subject to a number of pre-closing conditions, including mandatory authorizations under antitrust and “golden power” regulations and from other competent regulatory authorities, as well as the Tunisian government’s approval and the consent and/or approval of certain target companies’ shareholders and boards of directors. A ticking charge will accumulate on the consideration from the date of the balance sheet of reference (30 June 2021), to be paid by Snam to Eni upon the conclusion of the transaction, due to the postponement of the close to allow the fulfillment of the conditions precedent.
