The significant value of its energy portfolio is highlighted by GEK TERNA’s partnership with the Motor Oil Group to unite HERON’s activities with NRG. Senate analysts estimates now determine the value of GEK TERNA’s energy portfolio at around € 600 million (or 6 euros per share), as evidenced by the transaction with Motor Oil.
It is an assessment that, in some cases, exceeds previous forecasts, which is expected to lead to adjustment of target prices upward.
At the same time, the transaction is aligned with GEK TERNA’s strategy for further focus on concessions and infrastructure projects – a development that is expected to further strengthen the company’s investment profile.
In addition, it confirms the strong history of the group in implementing strategic transactions that highlight goodwill, enhancing the attractiveness of its overall portfolio.
What do analysts say
Mediobanca, in its recent analysis, notes that the agreement creates a growing value (Value Accretive) for GEK TERNA. According to the Italian Investment Bank, the valuation of 50% of GEK TERNA’s participation in the new company (including € 128 million in cash) is approaching € 600m – exceeding the current energy portfolio valuation. The transaction, as he points out, is fully aligned with the group’s strategy focusing on transport infrastructure and constructions, areas with increased prospects of value creation. The liquidity resulting from the agreement will be used to repay the Holding’s existing unified loan. In this way, the financial image of the Group is strengthened and conditions are created to distribute increased dividends – although priority in the coming years are the implementation of new investments and the advances for new highway projects.
The deal is added to the powerful track record of GEK TERNA in the field of mergers and acquisitions (M&A), after the sale of TERNA Energy to Masdar, the HERON I unit in PPC and 10% of the Attica Road in Latsco.
Wood & Co values the new Joint Company GEK TERNA – MOTOR OIL at € 1.4 billion. Given the estimated net lending of the new entity and the cash collected by GEK TERNA, it appreciates the value of the energy portfolio of about € 600 million. It highlights the significant ability to further create value due to size and synergies, as the combined operating cost (OPEX) of the two subsidiaries is estimated at € 100 million. In addition, significant synergies are expected to result in variable costs (eg in the supply of gas).
Wood stresses that the transaction has a positive effect on GEK TERNA, as it crystallizes value and allows investors to focus on concession and construction activities, which are higher growth rates and greater intrinsic value.
Axia Ventures estimates that the new assessment of the energy portfolio, after a transaction with Motor Oil, is higher by EUR 150 million (or 1.5 euros/share) compared to its own previous estimate of € 450 million, describing the Value Accretive agreement. He also considers that the transaction has a positive impact on two levels:
- It is clearly facing the areas of concessions and constructions, making the Investment Case clearer for the group.
- The cash collected by GEK TERNA will boost the implementation of its future investment.
- It also notes that under the valuation of € 600 million for the energy portfolio, GEK TERNA’s current stock market value suggests that concessions and constructions are valued at € 1.45 billion – which is characterized as clearly undervalued.
Eurobank Equities characterizes the agreement as a “win-win” agreement for both groups, with GEK TERNA acquiring a strong partner in the energy supply chain, receiving 258m euros in liquidity. As a result, the financial position of new tenders for concessions, which are a strategic priority for GEK TERNA, is strengthened.
Another benefit of the transaction, according to Eurobank, is to get caught up with CO₂ emissions, enhancing the group’s viability profile. The valuation is considered balanced, as the € 128m price converges with the estimated valuation gap (EUR 160 million) for 50% of the two activities, after adjusting for net debt and cash -free at the closure of the transaction.