Romania’s Govt. allows Hidroelectrica to bid for CEZ’s assets

Hidroelectrica, the largest electricity producer in Romania, received on July 25 the agreement of its majority shareholder, the Economy Ministry, to submit a binding offer for the Romanian assets of the Czech group CEZ.

Hidroelectrica will make the bid in a consortium with Electrica and SAPE, also controlled by the state. The approval also allows the company to contract a loan to finance the deal.

Hidroelectrica was supposed to submit the bid on June 25.

There are reportedly three other "strong" bidders, Economica.net commented.

The Government, through the Economy Ministry, holds an 80% stake in Hidroelectrica.

The largest investment fund in Romania, Fondul Proprietatea, a minority shareholder of Hidroelectrica (20%), did not participate in the shareholders' meeting after it publicly argued against the bid, Profit.ro reported.

According to its 2019 annual report, Hidroelectrica is interested in all Romanian assets put up for sale by CEZ.

"The portfolio of assets that are the subject of this potential acquisition is complementary with Hidroelectrica's current activity and with the purpose defined by its shareholders to maintain the company in the field of electricity production and system service provision not only nationally, but at a regional level as well," the company's management argued.

Hydropower company Hidroelectrica is reportedly particularly interested in CEZ's wind farms, while Electrica would like to add the Czech group's electricity distribution network to those that it already operates.

CEZ has estimated the aggregated equity of its Romanian subsidiaries at EUR 1.07 billion, according to a presentation prepared for prospective bidders. The two wind farms (347.5MW+252.5MW) account for nearly two-thirds of the total value of the CEZ assets in Romania: EUR 654 mln combined equity. The stake in the electricity distribution company CEZ Oltenia is valued at EUR 385 mln.

CEZ also controls three smaller companies in Romania: CEZ Vanzare (electricity supply, EUR 18.6 mln), TMK Hydroenergy Power (22MW micro hydropower plants, EUR 9.5 mln), and the holding company, valued at EUR 8.25 mln.