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Enel (OTCPK:ENLAY) shares rise more than 1% in Europe in Monday's trading after agreeing to sell some of its electricity distribution activities to Italian utility A2A for €1.22B (~US$1.3B).
Enel (OTCPK:ENLAY) announced Saturday that its E-distribuzione subsidiary will sell 90% of the capital in a newly-created company that will boost A2A's electricity distribution in Milan and Brescia; upon completion of the sale, A2A will have the option to buy the remaining 10% stake at a later date.
Enel (OTCPK:ENLAY), Italy's largest utility, said it expects the deal will generate a positive effect on its 2024 consolidated net debt of ~€1.2B and a positive impact on full-year reported net income of ~€1B.
The deal will raise the number of A2A's installed electrical point of deliveries in 2024 by ~70% to 2.1M from 1.3M in an area of Lombardy where the group already is active in the electrical distribution sector, the company said.
The sale is a positive step for Enlay's (OTCPK:ENLAY) debt reduction strategy and highlights the strong value of its grid assets, Jefferies analysts say.
The disposal is not a surprise but "it does help de-risk Enel's deleveraging plans and crystallizes premium valuation for some of its grid assets, [and is] consistent with the company's strategy to reorient focus within Italy towards regions with more favorable regulation," Jefferies says.