Gazprom, E.On, Wintershall, Gaz de France, and Enel are pulling out all the stops to secure a deal which is estimated as standing at half a billion dollars. The takeover of Romania's gas distributors Distrigaz Sud and Distrigaz Nord, the largest such companies in Central and Eastern Europe, has attracted the attention of the big European companies operating in this industry. These players are hoping to consolidate their positions on the single European gas market.
Not even the privatisation of the National Oil Company Petrom drew comparable levels of interest from foreign investors, while the sale of the electricity distributors was completely uneventful - the Romanian state fought for over a year to push the price up during negotiations with the sole bidder, Italy's Enel Group.
Unlike the electricity distributors, Distrigaz Nord and Distrigaz Sud remained profitable even under the management of the Romanian State, a fact which has encouraged the investors.
Consequently, the privatisation of the country's gas distribution companies clearly involves more backstage fighting and lobbying than in the case of the sale of Petrom and Electrica. The whole issue has turned into a complex economic-political affair.
The State is selling 30% in each of the two natural gas distributors to investors, which will then have to participate in a capital increase in order to obtain a final 51% stake. Furthermore, an investor is not allowed to buy more than one of the two companies, to avoid the creation of a monopoly.
During the transaction the state is being advised by the investment bank Credit Suisse First Boston, by the Romanian-American Enterprise Fund (RAEF) and by the law firm Linklaters Miculitii & Asociatii. The state has suggested that investors should formulate their financial bids by taking into consideration the regulated asset base of the two companies. According to this indicator, Distrigaz Nord is worth $400 million, with Distrigaz Nord's value being in the region of some $250 million. Investors will consequently have to pay at least $120 million to buy the 30% stake in Distrigaz Sud, and considering the capital contribution needed for the second stage, the transaction would stand at a minimum value of $292-300 million.
In the case of Distrigaz Nord, the acquisition of 30% of its shares would require a minimum of $75 million, with this level to increase to some $182-185 million following the capital contribution.
Beyond the money issue, the battle being waged by the five investors has turned into a fight aimed to secure interlocutors at the highest political level in Romania - President, Premier or Minister of Economy. As the deadline for submitting the financial bids (July 15) looms, Bucharest is being visited by delegations of foreign investors, comprising top officials from the companies.
However, it's not just the investors who are waging war, with their assisting teams becoming similarly involved. The consultancy contract for acquisition and post-acquisition is worth, according to some estimates, about one million dollars.
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