China to bid for German firm
State Grid Corporation to make ‘outrageously attractive’ offer for 20% of power network company 50Hertz
State Grid Corporation of China’s (SGCC) deep pockets would probably overcome German political resistance to a bid for 20% of power network firm 50Hertz, industry sources said, in the latest sign of Chinese interest in the German market.
SGCC, the world’s largest utility, is in talks with Australian infrastructure fund IFM Investors about buying half its 40% stake in 50Hertz, one of Germany’s four high-voltage power network operators.
Belgian grid operator Elia, which owns 60% of 50Hertz, said on Friday it had two months to decide whether to exercise a right to buy the 20% stake from IFM before SGCC can bid.
But investment banking sources said it was unlikely Elia would match SGCC’s price.
SGCC is expected to bid €800m-€1bn for the 20% stake, said two informed sources. That dwarfed the €810m Sweden’s Vattenfall received for 50Hertz in 2010.
“Given the price, there will not be a counterbid from a third party,” one of the sources said. “Once Elia takes its decision the stake sale will finally go ahead.”
A second banker said SGCC’s price would be so “outrageously attractive” IFM would have no choice but to negotiate a sale.
IFM is one of the world’s largest infrastructure investors and holds stakes in grids, pipelines, airports, harbours, toll roads and energy and water infrastructure in Australia, Europe and North America.
SGCC and IFM did not comment on the proposed deal.
SGCC’s push underscores China’s unabated interest in German companies. Car maker Geely said on Monday it had built up a 9.7% stake in Daimler.
SGCC has amassed a portfolio in southern Europe, buying stakes in various grid operators. But despite overtures, it has yet to get a foot in the door in northern Europe, as opportunities are rare and Chinese infrastructure investment faces political hurdles.