MILAN, July 25 (Reuters) - Italian utility Hera will merge with smaller peer AcegasAps as it seeks to grow in the rich north east of the country and consolidate its position as Italy’s second-biggest regional player.
The boards of the two northern Italian utilities on Wednesday approved plans for a merger that will give Hera 62.69 percent in AcegasAps and create a group with core earnings of more than 750 million euros, Hera said in a statement.
Synergies were estimated to reach 25-30 million euros per year, it said.
The Bologna-based utility said it would buy back remaining AcegasAps shares after the merger with the aim of delisting the company.
The swap ratio for the merger is of around 0.763 new Hera shares for each euro of AcegasAps Holding’s social capital. The equivalent terms for the bid on minorities are of 4.16 new Hera shares plus 0.27 euros for every AcegasAps share.
The Italian cities of Trieste and Padua, which are the only shareholders in AcegasAps Holding, will receive around 143.38 million Hera shares and 3.4 million euros, Hera said.
Hera closed on Wednesday up 0.79 percent at 1.01 euros while Acegas ended up 4.48 percent at 3.73 euros.
Italy’s regional utilities are seeking to expand in a fragmented sector to allow them to better compete with larger energy players and to cope with fallout from a growing sovereign debt crisis.
But with most utilities controlled by local authorities, governance issues have proven to be a major obstacle.
The merger plan approved by the boards of Hera and Acegas will have to be signed off by the shareholders. Hera is controlled by a series of local authorities.
The Italian government is encouraging consolidation of the sector through state-controlled financing company Cassa Depositi e Prestiti which has set up a fund to invest in minority stakes in local utilities.
A merger of Hera and Acegas would create a group with combined revenues in 2011 of almost 5 billion euros, making it the No. 2 regional player behind A2A.
Analysts said that the similarity of the business lines of the two companies and their geographical proximity should allow Hera to exploit synergies. (Reporting by Stephen Jewkes and Valentina Za)