Naturgy’s board of directors took a historic decision on February 1st. After 140 years of history, the company agreed to split it into two companies within the so-called Gemini project to boost its stock market valuation and provide more liquidity to its shareholders.
On the recommendation of the management committee, and after unanimous approval by the council, the gas company will make the decision to divide its businesses until the next extraordinary meeting.
On the one hand, regulated assets will be grouped together and, on the other, liberalized assets. The Géminis 1 company – whose name has not yet been received – will transfer the transport and distribution activities currently in Nedgia, Unión Fenosa Distribución or the group’s assets in networks in countries such as Chile, Argentina, Panama, Mexico and the Brazil. This company will have an asset base of 155,000 kilometers of electricity networks, 135,000 kilometers of natural gas networks and 16 million connection points.
On the other hand, in Géminis 2 the generation and commercialization firms will be located. The company will have the development of renewable energy, the portfolio of energy customers and related services, the traditional generation park that ensures supply, and the management of wholesale energy markets. With targets for 2025 of 25 GW of installed electricity generation capacity (14 GW of renewable energy and 11 GW of conventional generation), 11 million customers and a diversified portfolio of approximately 290 TWh of gas supplies.
Both companies will be listed and will have the same shareholding structure as Naturgy currently has, that is to say that Críteir will continue to own 27% of the shares, CVC and GIP with 20% each and MFI with 12% of the capital and the rest floating free.
The president of Naturgy, Francisco Reynés, confirmed that there is a lot of work ahead, since the company has not yet made decisions on the new brands, the location of the headquarters, or on corporate governance. Currently, Pedro Larrea is the person in charge of the regulated business at Naturgy, and the renewable area reports to clients Jorge Barredo and Carlos Vecino. The division of the two companies is likely to involve changes in the company’s organizational chart and it is likely that these directors will be in the different companies.
When the operation receives the regulatory approvals, the titles will be split and each shareholder will have the same number of titles in each company. At the moment, as explained by Reynés, it is not possible to estimate the weight of each of the companies, because it will depend on the distribution of the 13,000 million euros of debt that the company currently has.
In any case, the Naturgy division will be one of the largest operations carried out in Spain according to the value of the company, since a company with a value of 40,000 million euros will be distributed (debt 13,000 million and capitalization 27,000 million).
“With this operation, the company intends that the shareholders will not lose liquidity and that the sum of the two shares is the same and we hope that it will be more,” said Reynés.
It is expected that the operation that is starting now will be closed during this year to benefit from the accounting closure of 2021. As explained by the president of Naturgy, with this operation, the company will be able to benefit from a greater focus and is he hopes he will. There will be a “remarkably positive effect” so that the specialization of both parties increases. For Reynés, it is a brand new project in Spain that allows to focus on the core activity and avoid the problems of a large conglomerate.
The consequences of Gemini, says Reynés, “will be great for Spain since two national champions will be created in size and capitalization. Either of them will have a capitalization above the Ibex average.”
The second characteristic of the Gemini project, according to the president of the company, is “the illusion it is facing from the point of view of those who have to execute it. It is not normal for the stick of these projectors to correspond. to the address committee”.
Naturgy indicated that the operation will not involve changes in employment or the company’s portfolio since it is not considering selling the company. The company also reiterated the objectives of the strategic plan presented in the middle of the takeover bid IMF and it ensures that both the investment and dividend plans will be maintained, that is, that the sum of the two parts will reflect the objectives set in this new strategic plan of the company.
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