Spanish utility Naturgy Energy Group SA and Algerian oil company Sonatrach SpA agreed to acquire Abu Dhabi state fund Mubadala Investment Co.'s 42.09% interest in Medgaz.
Medgaz is responsible for the construction and operation of a deepwater gas pipeline from Algeria to Europe through Spain, according to an Oct. 15 news release.
Through the deal, Naturgy will increase its current 14.95% stake to 49%. It will acquire the additional 34.05% interest for €445 million, funded with a €260 million nonrecourse loan via a special purpose vehicle.
Sonatrach, which owns and operates a connecting gas pipeline on the Algerian coast that links up with Medgaz, will up its current stake to 51%. The two companies will have joint control of Medgaz, the statement said.
The transaction values 100% of Medgaz's equity at €1.30 billion with an enterprise value of approximately €1.90 billion. Medgaz is expected to deliver dividends above €130 million per annum from 2021 onwards.
All of the pipeline's capacity is contracted under euro-denominated "send or pay" agreements until 2031.
Completion of the transaction is expected to occur prior to the end of March 2020, subject to compliance with certain conditions and approvals.