After it was already rumoured in Les Echos, GDF Suez now confirmed that it recently entered advanced discussions with a public consortium composed of CNP Assurances, CDC Infrastructure and Caisse des Dépôts for the joint development within GRTgaz of a long-term natural gas transmission partnership to operate in France and Europe. The consortium would take a 25% minority stake in GRTgaz.
Within this partnership, GRTgaz will extend its activities beyond France by the acquisition of the GDF SUEZ equity stakes in European transmission operators in Germany (GRTgaz Deutschland GmbH and MEGAL GmbH), and in Austria (BOG GmbH). This deal will according to the company strengthen the GRTgaz development plan and provide security for an ambitious investment program over the next ten years in a context of high infrastructure needs in Europe.
The consortium’s offer values the 25% equity stake at € 1.1bn (Ex 2010 dividend). The procedure is expected to be concluded during the second half of 2011.
We understand from the Reference Doc 2010 the regulated asset base (RAB) was € 6,212m as of December 31, 2010, while net debt is ~€ 2.2bn (end 2009) and we make a rough estimate on other long term liabilities (provisions, deferred taxes) of € 0.5bn. This would imply an equity value of € 3.5bn hence € 0.9bn for a 25% stake. At the confirmed € 1.1bn this would imply a 10% premium to RAB end 2010 and an EV of € 7.1bn. Note that we need to be aware that the deal is Ex-2010-dividend and that our model indicates an RAB of € 6.6bn end 2011. At our EBITDA 2011 estimate of € 960m, this implies an EV/EBITDA11 of 7.4x, which seems a fair price for a regulated asset. Our SoTP valuation adjusts for a 10% premium to RAB end 2011, or an EV of € 7.3bn while the 2010 dividend will still be paid to GDF Suez.
The sale of GRTgaz does not come as a surprise and was already commented by management during the presentation of its FY10 results. The sale of a 25% stake at € 1.1bn is part of the contemplated € 10bn disposal plan targeted 2011-2013. The price seems fair and in-line with our valuation. We expect other assets to be sold contain stakes in its E&P portfolio andin Belgian municipalities.
We maintain our Accumulate rating.