Belgium Elia to raise EUR300m via capital hike to buy 60% of German 50Hertz

Belgian power grid Elia (EBR:ELI) on Friday said it planned to raise up to EUR300m (USD392m) in a capital hike to fund the purchase of 60% in German high-voltage power grid 50Hertz from Vattenfall Europe.

Elia announced an agreement on the acquisition of 50Hertz together with Australian Industry Funds Management, or IMF, on 12 March and expects to close the deal by the end of May 2010. The acquisition is a strategic move for Elia aimed at strengthening its position in the development of the central west European market in the context of regional integration.

Elia and IFM are buying 50Hertz through their joint unit Eurogrid GmbH, for a total of EUR464.6m, of which Elia will pay EUR278.8m for its 60% stake and IFM will pay the remaining amount for its 40%. Elia and IFM will also take over a shareholder loan of EUR320m, which will be replaced with a two-year bank loan.

50Hertz's equity is estimated at EUR890.5m as of 31 December 2009 based on currently available information, while its assets are valued at EUR2.096bn as of 31 December. As the value of the bought assets exceed the value of the deal, most likely Elia will recognise as profit gain some EUR255.5m.

Elia has hired a syndicate of KBC Securities, ING, Dexia and BNP Paribas to advise on the deal.

Country: ; Germany

Sector: Utilities

Target: 50Hertz Transmission GmbH

Buyer: Industry Funds Management ; Elia System Operator SA/NV

Vendor: Vattenfall Europe AG

Deal size in USD: 607m

Type: Corporate acquisition

Status: Agreed

Buyer advisor: Dexia SA; ING Groep NV; BNP Paribas SA; KBC Securities

Comment: Elia announces capital hike to fund deal

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