EPH in talks to buy Slovak gas monopoly SPP

By bne IntelliNews March 8, 2012

Tim Gosling in Prague -

Czech energy group Energeticky a Prumyslovy Holding (EPH) confirmed on March 7 that it has held talks over the acquisition of the foreign-held 49% stake in Slovak gas monopoly SPP. The secretive company is also said to be interested in purchasing the Czech gas pipeline system, whilst speculation persists that it may be fronting acquisitions for Gazprom.

EPH, an energy joint venture in which PPF holds 40% along with J&T Group (40%) and Czech national Daniel Kretinsky (20%), has been on an acquisition spree in Central Europe, taking stakes in heat and power plants, and coal mines in recent times. It's interest in the Czech and Slovak pipeline operators has long been known, but a company spokesman confirmed to Reuters that talks with GDF Suez and E.On, which own the minority stake, are underway.

Declining to go into details, EPH spokesman Martin Manak said there have been talks on the 49% stake held by the foreign owners in SPP, in which the state owns the controlling share. "We had talks with both companies, ie. both shareholders of the consortium," Manak said, confirming an earlier story in Czech newspaper Hospodarske noviny.

The minority stake in SPP was privatized in 2002 for $2.7bn, but many Western European energy giants are in the process of rationalizing their assets in a bid to cut their debt burden. In the Czech Republic, E.On's compatriot RWE is looking to offload gas pipeline operator Net4Gas, another asset in which EPH has expressed its interest.

Given the strategic nature of both SPP and Net4Gas for Russian gas exports to Europe, speculation has naturally followed that Gazprom - which is in the midst of a tussle to finally grab control over Ukraine's pipelines - would be hugely interested in the assets. On top of that, PPF has many Russian investments, with owner Petr Kellner closely associated with the oligarch grouping which surrounds Alexander Nesis and Alexander Mamut, in turn associated with Suliman Kerimov, who has been noted by some as the Kremlin's latest favorite bagman.

At the same time, EPH has been building a wide portfolio of Central European energy assets, and is reported to be looking at Czech power plants at Pocerady and Chvaletice, currently owned by CEZ, as well as large investment in several assets in the German power sector. Overall, claims the Czech newspaper, the holding could increase the value of its assets past the €5bn mark, should all plans come to fruition.

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