May 19, 2017 / 12:08 PM / in 2 months

UPDATE 1-PGE agrees to buy EDF's Polish power plants for $1.2 bln

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WARSAW, May 19 (Reuters) - Poland's biggest power producer PGE has agreed to buy French group EDF's local power and heating plants for 4.51 billion zlotys ($1.2 billion) including debt, in a move to increase market share and give the state more control over the country's energy assets.

In March Enea, another state-controlled utility, closed a deal to buy the 1.9 gigawatt capacity Polaniec coal-fired power plant from French group, Engie.

The deal to buy EDF's plants, which include eight combined heat and power plants and a 1.8 gigawatt coal-fired power plant at Rybnik, in the south of the country, is expected to be concluded by January 2 2018, PGE said.

The enterprise value put on the deal comprises 2.45 billion zlotys for EDF Polska's equity and 2.06 billion zlotys of net debt, implying a price multiple of 4.1 times EDF Polska's earnings before interest tax, depreciation (EBITDA) last year of 1.1 billion zlotys.

"We will finance the deal from our own funds and we should not have any problems with that," PGE Chief Executive Henryk Baranowski said, adding that PGE had 4.6 billion zlotys in cash as of the end of March.

Earlier this month PGE suspended dividend payouts due to the investment plan.

Shares in PGE were up 3.73 percent at 11.40 zlotys by 1203 GMT, when EDF's share price was up 3 percent at 9.22 euros.

"I am glad of this transaction, as I will not have to be worried about the investor's plans," Poland's Energy Minister Krzysztof Tchorzewski told reporters at a news conference, referring to the fact that PGE is majority-owned by the state.

Last year the energy ministry blocked the sale of the EDF business to two private investors - Australia's IFM Investors and Czech utility EPH, citing concerns over the country's energy security.

Tchorzewski said that as a result of the acquisition PGE's share of the country's power generation capacity would increase to 45 percent from 36 percent, while PGE said the acquisition of the cogeneration plants would increase its district heating interests by 177 percent. ($1 = 3.7691 zlotys) (Reporting by Agnieszka Barteczko; Editing by Marcin Goclowski, Greg Mahlich)

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