By Rebecca Evans and Fred Pals
Feb. 23 (Bloomberg) -- Vattenfall AB is close to a deal to buy nearly half of Nuon NV’s utility unit for about 3.5 billion euros ($4.5 billion), the Wall Street Journal reported, citing people familiar with the matter.
Nuon, based in Amsterdam, would be the second Dutch utility to sell part of its production and supply business after RWE AG last month said it is buying Arnhem-based Essent NV for 9.3 billion euros. That deal excludes Essent’s distribution networks and waste-management unit.
The four biggest Dutch utilities are required by law to separate their production, trading and sales units from grid operations by Jan. 1, 2011. The unbundling is aimed at promoting competition and encouraging grid investment.
“We only communicate on done deals, we do not comment on rumors,” Erik von Hofsten, head of Vattenfall media relations Nordic, said by telephone today, when asked about the WSJ report.
Nuon also declined to comment on the newspaper report, spokeswoman Melanie Poort said today when contacted by Bloomberg News.
European utilities have bucked a trend for fewer mergers and acquisitions as changes in European Union law provide incentives for combining. Cost-cutting, diversification and declining stocks have made targets cheaper. The pace of mergers and takeovers fell 39 percent to $2.48 trillion last year as a credit squeeze hampered financing, according to data compiled by Bloomberg.
Seeking Foreign Partner
Nuon said last year it was looking for a foreign partner to complement its production and supply business. That followed the failure of merger talks with Essent.
Nuon has said it plans to sell 40 percent of the company’s retail, power generation and trading business. Power and grid assets are not included in the deal. Nuon Chief Executive Officer Oystein Loseth said last month he expected to complete the sale process before the summer.
Nuon, which has about 10,000 employees, said Feb. 16 that fourth-quarter profit fell 62 percent as production declined and operating expenses increased. Net income fell to 79 million euros from 210 million euros a year earlier. Sales dropped to 1.62 billion euros from 1.78 billion euros.
Vattenfall and Denmark’s Dong Energy A/S were cited as possible bidders by De Volkskrant on Jan. 23. The newspaper said then that Nuon’s value was 7 billion euros.
Eni Spa Chief Executive Officer Paolo Scaroni also said this month Italy’s biggest energy company was “considering” bidding for Nuon assets as it tries to sell more natural gas in Europe.
“We have not yet decided if we want to make an offer,” Scaroni told Bloomberg Television in an interview in London on Feb. 13. “We want to know exactly how the business is, how it will fit with our strategy.”
To contact the reporters on this story: Fred Pals in Amsterdam on fpals@bloomberg.netRebecca Evans in Sydney at revans6@bloomberg.net
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