Vattenfall published today (22 September) an ad in the Financial Times to start the formal market approach.
The offered portfolio located in Brandenburg and Saxony/Eastern Germany includes all lignite power plants (Boxberg, Jänschwalde, Schwarze Pumpe and Lippendorf block R), as well as corresponding mining activities (Jänschwalde, Nochten, Reichwalde Welzow-Süd and Cottbus Nord).
Acquisition of Hydro portfolio is not a stand-alone option
Potential bidders will be given the opportunity to bid also for a portfolio of the region's hydro assets in conjunction with the German lignite assets.
“They may represent an attractive complementary addition to the lignite assets,” explains Magnus Hall, Vattenfall’s CEO. “But Vattenfall will only accept a deal where lignite and hydro assets are sold together. Hydro is not a stand-alone option for a buyer.”
Final deal in 2016
Interested parties now have to submit a statement of interest.
“We will then carefully scrutinise the parties to ensure that they are credible bidders. At that point a regular mergers and acquisitions process will start,” says Magnus Hall and states that the entire sales process is expected to last into 2016.
“Given the complexity and the size of this transaction we cannot give an exact timeline, but due to the thorough preparation in the past months, we are confident that we can proceed according to our plan.”
The divestment process has to be prolonged due to an intense German debate in the previous months about the political framework for lignite.
“The government’s proposal to create a lignite capacity reserve provided the needed clarity to open up the sales process,” says Magnus Hall.
“Given that this transaction has a very high importance within the German energy landscape we can expect a high media and stakeholder interest. We run these processes with the utmost confidentiality as we always do and we will not be able to comment on related issues.
Germany is and remains a core market
“The divestment of our lignite assets is an important step to fulfil the company’s sustainability targets,” says Magnus Hall and states that Germany will remain a core market for Vattenfall.
“We have more than 3 million B2C customers, an ambitious investment program for our heat business, a successful distribution business in Berlin, a professional trading unit and our renewable wind activities.”