RWE's Takeover of Czech Transgas Now Ready for Antitrust Consideration
January 30, 2002
Now that it has signed the final agreement to acquire Czech gas-import monopolist Transgas, utility RWE AG requires only antitrust clearance to ensure that the deal will go ahead.
The deal will be examined by the German and Czech cartel authorities. The possibility of referral to the European Union Commission will also be considered, since this would enable RWE to pre-empt any future attempts to scale back its monopoly position on the Czech market when the Czech Republic joins the EU.
RWE is expecting Czech EU accession to go ahead in 2004, but liberalization of its gas market will not start until 2005. If all antitrust approval is secured, RWE's RWE Gas arm will pay some CKr133 billion (4.17 billion euros) to the Czech fund for managing state patrimony.
In return it will acquire a 96.99% stake in Transgas but also the Czech government's stakes of 46–58% in eight regional gas suppliers.
In at least two cases – JCP (which serves the southern part of the Czech land of Bohemia) and VCP (eastern Bohemia) – RWE Gas will not be acquiring an outright majority and it will have to negotiate with an alliance of its main German rival E.On AG and Ruhrgas AG (which E.On is trying to take over).
Even with other suppliers, where RWE Gas will enjoy an outright majority, it will still have to contend with minority shareholders who hold blocking minorities. RWE insiders were not able to comment on whether RWE Gas might consider issuing an offer to its co-shareholders to take over their stakes in these suppliers.
"The deliberations have just started," it was said. But it's possible that RWE Gas will be forced to present an offer for the shares it does not hold in the suppliers.
The Czech constitutional court is currently examining whether it should be made compulsory for majority shareholders in listed power and gas utilities to make a public offer for all shares.
If it decides to adopt such a rule, RWE Gas is likely to end up paying more than it expected for a slice of the Czech market.
Still, with Transgas, RWE Gas will gain control of a network that is seen as the "main artery" through which exports of Russian natural gas flow into western Europe, with a share of up to 32% of the total.
According to RWE's own figures, the Transgas acquisition will make RWE Gas Europe's fifth-largest supplier of natural gas in terms of volume sold. In terms of network capacity, it will become Europe's number two, behind Gaz de France.