Snam buys 33% of De Nora to boost position in hydrogen technologies
24 November 2020
Italian gas group Snam on Thursday announced a deal to acquire 33 per cent stake in Industrie De Nora from Blackstone, in a deal valuing the clean energy company at around 1.2 billion euros ($1.4 billion) including debt.
Snam has signed an agreement with funds managed by Blackstone Tactical Opportunities for the purchase of a strategic stake of approximately 33 per cent in Industrie De Nora SpA, a global innovator in sustainable clean energy and water treatment technologies, based on a 100 per cent enterprise value of approximately € 1.2 billion.
Snam said the acquisition, whose completion is scheduled for the first quarter of 2021 after the relevant antitrust clearances, will be undertaken with own funds.
The De Nora stake deal, which it expects to complete in the first quarter, will strengthen its position in green hydrogen technologies, Snam said.
Last year Snam, which makes most of its revenue from gas transport in Italy, set up a hydrogen unit as part of its plans to position for the transition to cleaner energy with a pledge to spend more on new green business lines.
“The partnership with De Nora will allow us to be a leader in the development of green hydrogen, which is becoming a key feature of the decarbonisation agenda,” Snam CEO Marco Alvera said in a statement.
The partnership with De Nora allows Snam to increase its exposure to megatrends of the energy transition, in particular on technologies for the production of green hydrogen and water treatment
De Nora is a global leader in alkaline electrodes, essential components for the production of alkaline water electrolysers (AWE) and collaborates with fuel cell operators. The company also holds a 34 per cent stake in ThyssenKrupp Uhde Chlorine Engineers (TKUCE), a joint venture with ThyssenKrupp, amongst the world leaders in AWE, involved in several large global hydrogen projects.
Snam will leverage technologies and know-how of which De Nora is one of the world leaders, enhancing its competitive edge in hydrogen projects. The companies will partner in order to cross sell their respective capabilities
This acquisition anticipates a new investment platform on the energy transition, with a focus also on hydrogen, of which Snam would be the anchor investor to gain exposure to energy transition projects in a ring-fenced and disciplined manner. De Nora represents a potential seed asset for the platform.
De Nora, an Italian company founded in 1923, offers sustainable solutions for various industrial processes and has significant growth prospects thanks to exposure to two megatrends in the energy transition, in particular the production of green hydrogen and water treatment. With regards to hydrogen, De Nora's strength stems from its world-leading position in the manufacture of electrodes for electrochemical industrial applications. The company has a consolidated leadership in numerous sectors. In particular, in the recent past De Nora launched its latest generation of electrodes, essential components to substantially improve the performances and the economics of hydrogen produced using alkaline water electrolysis process.
Thanks to its technological leadership on electrodes, distinctive electrochemical competences and its consolidated supply chain, De Nora can benefit from the rapidly growing sector expectations and contribute to decarbonisation, while making hydrogen production through water electrolysis increasingly competitive in economic terms.
Synergic to its electrode business, De Nora holds a 34 per cent stake in ThyssenKrupp Uhde Chlorine Engineers (TKUCE), amongst the world leaders in the development, assembly and installation of alkaline water electrolysis and chlorine and caustic soda production. TKUCE AWE technology is involved in several large global hydrogen projects.
De Nora also collaborates with operators in the fuel cell sector, in particular since 2016 with AFC Energy Plc, a British manufacturer specialising in alkaline fuel cells.
De Nora is also a global leader in technologies for the treatment (disinfection and filtration) of water and for cathodic protection, both of which are businesses with potential synergies with Snam: for the activities of Snam4Environment, active in biomethane and in environmental and water solutions, and for gas transport.
The acquisition allows Snam to enhance its technological positioning to be increasingly competitive in new projects for hydrogen development. Alkaline electrolysers are complementary to membrane electrolysers, the sector in which ITM Power, a company with which Snam has recently signed a partnership, specializes.
The deal also allows both companies to benefit from their respective positioning on the market: Snam will be able to leverage De Nora's commercial presence and know-how in the value chain; at the same time, Snam's position along the hydrogen value chain will be able to support De Nora's commercial development.
De Nora generates revenues of more than €500 million per year (60 per cent in electrodes, 40 per cent in water treatment), with an expected EBITDA of € 90 million in 2020 and an average growth (CAGR) of 8 per cent over the past three years. The company is controlled by Federico De Nora.
Based on the agreements, which will be finalised upon completion of the operation, Snam will be able to appoint three directors of De Nora, and will be represented on the newly formed technical and strategic committees, with the possibility of seconding its staff to the company.
De Nora is ideally positioned to be an international, technology based listed company in the medium term and it represents a potential seed asset for a new investment platform on the energy transition. The objective of this new platform, which will be launched during 2021, is to respond to growing interest in clean energy and decarbonisation. The platform will focus on a limited number of mature companies at the forefront of energy innovation and exposed to the megatrends of energy transition and decarbonisation.
Snam will be the anchor investor of the platform. Through this new initiative, Snam will enhance its exposure to companies and projects relevant to decarbonisation, with a limited and disciplined financial exposure. Snam is fully committed to its current risk profile and credit metrics while maintaining a strong focus on core business.
"The strategic partnership with an Italian company of excellence, global innovator in sustainable technologies and with important prospects for hydrogen development, is a unique opportunity to strengthen Snam's role in the energy transition. The partnership with De Nora will allow us to be a leader in the development of green hydrogen, which is becoming a key feature of the decarbonisation agenda in Italy, in Europe and in many countries around the world. Thanks to this transaction and the new energy innovation platform we will be able to increase our exposure to new green technologies while remaining focused on our core business and contributing to a net zero world," Snam CEO Marco Alverà commented.
"The Blackstone team has demonstrated an excellent understanding of our business and the market, and they have helped us reshape our organisation to drive significant growth and be in the strong position we are today. We now look forward to working with Snam, our new minority shareholder, as we embark on the next phase in our company’s history. In Snam, we identified an industrial partner with significant operational synergies, who also share in our ongoing commitment to dedicate substantial resources in support of the global Energy Transition, for a less polluted world," Federico De Nora, chairman of De Nora, said.
"De Nora has further elevated itself into a leading position over the last three years across existing and new markets, particularly given the increasing demand worldwide for sustainable, environmentally friendly solutions. We are well positioned to support significant global shifts in investments addressing decarbonisation, thanks to a complete portfolio of high performing electrodes and solutions distributed through a valuable network of partnerships with key manufactures, and above all, thanks to the strength of our Joint Venture partnership with ThyssenKrupp Uhde Chlorine Engineers," Paolo Dellachà, chief executive officer of De Nora, commented.
The transaction will be presented to the financial community today at 9 am GMT in a conference call that can be attended virtually through the website www.snam.it.
Snam is one of the world's leading energy infrastructure operators and one of the largest Italian listed companies in terms of market capitalisation. Through its international subsidiaries, it also operates in Albania, Austria, China, France, Greece, UAE and UK. The Company has the largest natural gas transmission network and storage capacity among European peers and is also one of the main operators in regasification.
As part of a €6.5 billion plan to 2023, Snam invested €1.4 bn in the SnamTec project, focused on innovation and new energy transition businesses such as sustainable mobility, biomethane and energy efficiency.
Founded in 1923 in Milan, De Nora is a leading manufacturer of electrodes that can be used in the production of so-called green hydrogen production, which is produced from renewable energy sources using devices called electrolysers.