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A fast growing utility portfolio -- French acquisition for Suez

A bidding war for the pioneering French wind developer and operator La Compagnie du Vent ended with the international industrial and services group Suez paying EUR 321 million for a 50.1% stake in the company. This share will increase to 56.8% at the conclusion of a rights issue reserved for Suez when the deal is closed. Suez' ownership of La Compagnie du Vent will be via its Belgian-based subsidiary, Electrabel. Jean-Michel Germa, founder of La Compagnie du Vent, will retain the remaining shares and continue in his role as president.

Suez was just one of 35 major utilities which responded to an invitation issued by La Compagnie du Vent in the wake of Spanish wind giant Acciona deciding to sell its 50% share in the company. Although Acciona declines to comment on the sale, the construction giant is likely to have needed some ready cash following its recent acquisition, along with Enel, of Spanish utility Endesa (Windpower Monthly, November 2007).

"Acciona needed to get rid of good, liquid assets and La Compagnie du Vent was one of these," says Germa. While admitting he was initially disappointed to be ending the "good working relationship" with Acciona, which saw the value of his company grow 30 times in ten years, Germa decided to turn things to his advantage and put out a call for a new partner. Interest came from a range of big utility players looking to up their wind game, including Germany's RWE, France's GDF and EDF, Portugal's EDP and Spain's Iberdrola. They battled it out with others for a slice of the veteran French developer.

In the end, just Suez and RWE were left standing, with Suez eventually valuing the company at EUR 742 million, including debts of EUR 100 million. That is 65 times La Compagnie du Vent's turnover of EUR 11.3 million in 2007 and buys Suez a 50.1% stake in 148 MW of wind plant in operation or about to come online and over 6500 MW under development, mainly in France but also Morocco. The price paid reflects fair value, says Germa.

Suez is buying a company where "the depth of experience and the quality of projects give its portfolio a unique value compared to many companies on the market," he argues. And the price also reflects the increasing value placed on wind power in the light of Europe's mandatory renewables target. "Everything happening in the market stems from this goal," says Germa. Suez, like all major players in the energy market, needs to increase its share of renewables. The group aims to improve the mix of its clean energy production -- predominantly nuclear and hydroelectricity at present -- and to double the share of clean energy to 40% of total output.

So far, Suez owns 550 MW of installed wind capacity in Portugal, Belgium and France, plus 210 MW under construction and over 1200 MW under development. It recently bought Canadian wind project developer Ventus Energy (Windpower Monthly, August 2007), which gave it a foothold in the North American market.

Suez will provide the "necessary resources, support and skills" to ensure La Compagnie du Vent's continued growth and help it achieve its target of around 2000 MW in service by 2015 -- nearly 15% of the French wind market according to its estimates. In addition to its industrial and financial might, Suez will "bring to bear all the synergies of the group," said president Gérard Mestrallet, on announcing the deal. One obvious benefit will be Suez' worldwide presence, opening up the possibility of new international markets for La Compagnie du Vent.

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