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Japanese investors to buy Dutch utility Eneco for €4.1B

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Japanese investors to buy Dutch utility Eneco for €4.1B

Japanese investors Mitsubishi Corp. and Chubu Electric Power Co. Inc. have agreed to take private Dutch utility Eneco Groep NV in a deal worth €4.1 billion, after a bidding process that attracted the likes of Royal Dutch Shell PLC and KKR & Co. Inc.

The agreement was confirmed in a news release Nov. 25, nearly a year after Eneco and its 44 Dutch municipal shareholders began a process to privatize the company, which owns onshore wind, offshore wind and solar generation assets in Europe and has retail electricity customers in the Netherlands.

Mitsubishi and Chubu were selected in part because of their commitment to retain the Eneco brand and Dutch base, and their desire to expand the business internationally, Eneco said in a statement. The company has plans to expand its generation fleet to 2,200 MW by 2022, with Mitsubishi's involvement giving it access to new offshore wind markets in the U.S. and Japan.

Upon completion of the deal, Mitsubishi will own an 80% stake in the company, while Chubu will hold the remaining 20%. The two investors will fund the deal using existing cash resources.

Lead consortium partner Mitsubishi intends to use Eneco as its primary vehicle for European energy investments, and will transfer more than 400 MW of European offshore wind capacity to the company as part of the acquisition. Since 2012, Eneco and Mitsubishi have co-developed three offshore wind projects in the Netherlands and Belgium, as well as one of Europe's largest battery storage projects in Germany.

"The consortium has the required financial strength to further build Eneco, both in light of the energy transition as well as commercially," said Arjan van Gils, alderman responsible for finance in the municipality of Rotterdam and chairman of the Eneco shareholders' committee.

Eneco CEO Ruud Sondag will step down from his role after completion of the deal and become a senior adviser at the company. He will be replaced by another Dutch CEO.

"Our partner for several years, Mitsubishi Corporation, will now become our largest shareholder," Sondag said. "And, equally important: Eneco will remain intact as an integrated and independent Dutch energy company. We will receive ample opportunities for expansion both inside and outside Europe."

Among the bidders to miss out on the deal were Shell, in a joint venture with Dutch pension fund PGGM, as well as KKR, which bid alongside local banking group Rabobank, according to Reuters. Australia's Macquarie Group Ltd. and utility Electricité de France SA had also been linked to the takeover previously.

The transaction requires approval from Eneco's municipal shareholders.

Barclays is acting as financial adviser to Mitsubishi and Chubu on the deal, while Clifford Chance is the consortium's legal adviser. Citi is lead financial adviser to Eneco and its municipal shareholders, while ABN AMRO is financial adviser to Eneco and Stibbe is the company's legal adviser. Aperghis & Co is financial adviser to the selling shareholders, and De Brauw Blackstone Westbroek is legal adviser. NautaDutilh is legal adviser to Eneco's supervisory board, with ING acting as the board's financial adviser.