Eni Advances After Libya Says It May Purchase Stake

By Gianluca Baratti and Maher Chmaytelli

Dec. 8 (Bloomberg) -- Eni SpA surged in Milan trading after the Italian government said the Libyan Energy Fund is interested in buying a stake in Italy’s biggest oil company.

Eni climbed as much as 11 percent to 17.07 euros, its biggest gain since Nov. 24, and was trading up 1.59 euros at 16.98 euros, as of 2:57 p.m. local time, valuing the company at 68 billion euros.

Oil-rich nations have been showing greater interest in European companies since the financial crisis sent market values plummeting. European leaders such as French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi have suggested oil-producing countries might try to exploit falling share prices to bid for domestic companies.

“They will have to buy any stake in the open market, because the Italian government will not go below its 30 percent stake,” said Irene Himona, a London-based oil and gas analyst at Exane BNP Paribas, who has an “outperform” rating on the stock. “There is not much incentive to sell because the stock is at such a low price that Eni’s dividend yield, using last Friday’s closing price, is 9.1 percent per year.”

Libya could buy as much as 10 percent of Eni for as much as 9 billion euros ($11.5 billion), Il Sole 24 Ore said yesterday, citing Hafed Gaddur, Libya’s Ambassador to Italy. Eni said “it will provide the market with information on its shareholdings in line with regulations.”

‘Expressed Our Interest’

The Libyan government said on its Web site Dec. 6 it had “indicated to the Italian government an interest in acquiring a share in the capital of Eni” and that it would not “interfere in the company’s management in any way.”

The Italian Finance Ministry controls about 30 percent of Eni, which employs about 76,000 workers worldwide. Libya will buy shares of Eni “when the market is right,” the North African nation’s top oil official said today in an interview.

“Eni is one of the opportunities we’re looking at,” said Shokri Ghanem, the head of Libya’s National Oil Corp., in a telephone interview from Tripoli. “We expressed our interest to the Italian government and we will buy shares when we feel the market is right,” he said, without specifying a price at which Libya would buy Eni stock.

In Italy, Libyan sovereign funds are discussing a possible investment in Telecom Italia SpA, said Saif al-Islam Qaddafi, son of the country’s leader, Muammar Qaddafi, at a conference on Oct. 30. Libyan investors in October increased their stake in UniCredit SpA to at least 4.9 percent to become the Italian bank’s second-biggest shareholder.

Italy is the biggest trading partner of Libya, its former North African colony.

Italy’s benchmark S&P/MIB Index has fallen 53 percent this year and hit an all-time low on Dec. 5.

To contact the reporter on this story: Gianluca Baratti in Madrid at gbaratti@bloomberg.net