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Eni (E) Signs Deal to Divest Minority Stake in Plenitude to EIP
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Eni SpA (E - Free Report) reached an agreement to divest a 9% stake in its low-carbon and retail unit, Plenitude, to Energy Infrastructure Partners (“EIP”). The deal values the unit at €10 billion, inclusive of debt.
The initial capital increase is set at €500 million. Per the agreement, there is an option for EIP to increase it to €700 million by early 2024.
Following the completion of the transaction, this would represent approximately 9% ownership of the Swiss fund. The deal implies a post-money equity value for Plenitude of up to €8 billion and an enterprise value exceeding €10 billion.
In 2021, Eni introduced Plenitude as a key component of its decarbonization strategy. Plenitude is responsible for overseeing Eni’s retail customers, and providing services in renewables, gas and electric vehicle charging.
Plenitude is projected to achieve earnings before interest, taxes, depreciation, and amortization (EBITDA) of €900 million in 2023. The anticipated trajectory sees Plenitude’s EBITDA reaching €1.8 billion by 2026.
The unit is expected to achieve an installed renewable capacity of 3 gigawatts (GW), showing growth from the 2.2 GW recorded in 2022. The installed capacity is projected to exceed 7 GW by 2026.
The transaction is anticipated to establish a valuation benchmark for Plenitude, providing insight into its future listing on the Milan stock exchange. This comes after the energy group had to defer an initial public offering (IPO) in June of 2022.
Eni made a wise choice to delay the Plenitude IPO. The current equity valuation is higher than the €6-€7 billion Eni initially considered. By holding off, E is not rushed to list the unit and can wait for favorable market conditions.
Plenitude stated that the investment from EIP will introduce financial capabilities and market opportunities for the company. EIP's involvement aligns with Plenitude's strategy to generate value for all stakeholders and provides a valuation benchmark for the company.
Additionally, the deal is expected to enhance Eni's capital structure by reducing its consolidated net financial leverage and optimizing its capital base.
Murphy USA’s (MUSA - Free Report) unique high-volume and low-cost business model helps it retain high profitability, even in the fiercely competitive retail environment.
MUSA remains committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the fuel retailer recently approved a repurchase authorization of up to $1.5 billion, following the completion of the existing $1-billion mandate. The move underscores MUSA’s sound financial position and commitment to rewarding its shareholders.
Sunoco LP (SUN - Free Report) is among the biggest motor fuel distributors in the U.S. wholesale market, in terms of volumes. The Zacks Consensus Estimate for SUN’s 2023 and 2024 earnings per share (EPS) is pegged at $5.19 and $3.83, respectively.
Sunoco has a core competency in terms of its history of disciplined expense management. Over the past few years, the company has demonstrated a remarkable ability to control total operating expenses, with an annual growth rate of only around 2% since 2019.
The Williams Companies (WMB - Free Report) is a premier energy infrastructure provider in North America. WMB has a thriving deepwater transportation business. The company's deepwater portfolio includes a 3,500-mile natural gas and oil gathering and transmission pipeline, and is important for future cash flows.
WMB’s debt maturity profile is in good shape, with its $4.5-billion revolver maturing in 2023. It is also paying shareholders an attractive dividend yielding around 5%. Beside this, it has a share repurchase program worth $1.5 billion, thus highlighting its commitment to shareholders.
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Eni (E) Signs Deal to Divest Minority Stake in Plenitude to EIP
Eni SpA (E - Free Report) reached an agreement to divest a 9% stake in its low-carbon and retail unit, Plenitude, to Energy Infrastructure Partners (“EIP”). The deal values the unit at €10 billion, inclusive of debt.
The initial capital increase is set at €500 million. Per the agreement, there is an option for EIP to increase it to €700 million by early 2024.
Following the completion of the transaction, this would represent approximately 9% ownership of the Swiss fund. The deal implies a post-money equity value for Plenitude of up to €8 billion and an enterprise value exceeding €10 billion.
In 2021, Eni introduced Plenitude as a key component of its decarbonization strategy. Plenitude is responsible for overseeing Eni’s retail customers, and providing services in renewables, gas and electric vehicle charging.
Plenitude is projected to achieve earnings before interest, taxes, depreciation, and amortization (EBITDA) of €900 million in 2023. The anticipated trajectory sees Plenitude’s EBITDA reaching €1.8 billion by 2026.
The unit is expected to achieve an installed renewable capacity of 3 gigawatts (GW), showing growth from the 2.2 GW recorded in 2022. The installed capacity is projected to exceed 7 GW by 2026.
The transaction is anticipated to establish a valuation benchmark for Plenitude, providing insight into its future listing on the Milan stock exchange. This comes after the energy group had to defer an initial public offering (IPO) in June of 2022.
Eni made a wise choice to delay the Plenitude IPO. The current equity valuation is higher than the €6-€7 billion Eni initially considered. By holding off, E is not rushed to list the unit and can wait for favorable market conditions.
Plenitude stated that the investment from EIP will introduce financial capabilities and market opportunities for the company. EIP's involvement aligns with Plenitude's strategy to generate value for all stakeholders and provides a valuation benchmark for the company.
Additionally, the deal is expected to enhance Eni's capital structure by reducing its consolidated net financial leverage and optimizing its capital base.
Zacks Rank & Key Picks
Currently, Eni carries a Zack Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA’s (MUSA - Free Report) unique high-volume and low-cost business model helps it retain high profitability, even in the fiercely competitive retail environment.
MUSA remains committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the fuel retailer recently approved a repurchase authorization of up to $1.5 billion, following the completion of the existing $1-billion mandate. The move underscores MUSA’s sound financial position and commitment to rewarding its shareholders.
Sunoco LP (SUN - Free Report) is among the biggest motor fuel distributors in the U.S. wholesale market, in terms of volumes. The Zacks Consensus Estimate for SUN’s 2023 and 2024 earnings per share (EPS) is pegged at $5.19 and $3.83, respectively.
Sunoco has a core competency in terms of its history of disciplined expense management. Over the past few years, the company has demonstrated a remarkable ability to control total operating expenses, with an annual growth rate of only around 2% since 2019.
The Williams Companies (WMB - Free Report) is a premier energy infrastructure provider in North America. WMB has a thriving deepwater transportation business. The company's deepwater portfolio includes a 3,500-mile natural gas and oil gathering and transmission pipeline, and is important for future cash flows.
WMB’s debt maturity profile is in good shape, with its $4.5-billion revolver maturing in 2023. It is also paying shareholders an attractive dividend yielding around 5%. Beside this, it has a share repurchase program worth $1.5 billion, thus highlighting its commitment to shareholders.