Bloomberg
Vienna utility Wiener Stadtwerke GmbH agreed to buy a stake in neighbouring Lower Austria’s EVN AG from Germany’s EnBW Energie Baden-Wuerttemberg AG, tightening Austrian provincial governments’ grip on the power market.
Wiener Stadtw-erke agreed to buy EnBW’s 28% stake in EVN, subject to antitrust approvals in Germany and Austria, the municipality-owned company said in a statement. The parties agreed not to disclose the terms. Vienna becomes EVN’s second-biggest shareholder after Lower Austria, the province surrounding capital, which owns 51%.
EnBW is fetching more than 870 million euros ($972 million) for the stake, a premium of more than 10% over EVN’s closing price on March, the day when Bloomberg first reported the plan, according to people familiar with the deal who asked not to be identified because the terms are private. EVN is “an attractive investment opportunity in a rock-solid business,†Wiener Stadtwerke CEO Martin Krajcsir said.
While the investment in EVN may help Wiener Stadtwerke fund long-term pension commitments, another rationale cited by the people is that the city was recruited as a “white knight†by EVN executives and Lower Austrian politicians. According to that version, it was brought in to outbid a private equity investor, the people said.
While traditionally governed by opposing political parties, the Lower Austria governor and the Vienna mayor are the most powerful regional politicians in Austria, and have often teamed up against plans by the federal government. The incumbents are conservative Johanna Mikl-Leitner, and social democrat Michael Ludwig, who faces elections in the fall.
The opposition in Vienna’s city council was quick to question the deal’s pricing and origin.
“The deal makes little sense from a business or energy policy point of view,†Christoph Wiederkehr, leader of the opposition liberal Neos, said in a statement. “Wiener Stadtwerke is probably considered the more comfortable partner than a private investor.â€
EnBW, which first bought a stake in EVN in 2002, was among international utilities such as RWE AG and Electricite de France SA that tried to invest in Austrian utilities around the turn of the century. The German utility has unsuccesfully tried to sell the stake for years as outside investors struggle to compete against state-dominated utilities in the country of 9 million.
About 20% of the EVN are widely held. The shares traded little changed at 15.62 euros by 2:17 p.m. in Vienna. Austria’s constitution requires utilities to be 51% state-owned. The country’s biggest is Verbund AG, which is controlled by the federal government.