Eni, Europe's fourth-largest oil company, and a German partner have agreed to buy control of a southern German gas supplier for about 448 million euros ($442 million) to break into Europe's biggest energy market.
The Rome, Italy-based Eni and Energie Baden-Wuerttemberg said that the acquisition of a 62.2 percent stake in Gasversorgung Sueddeutschland values the whole of GVS at 720 million euros. They said in a statement that they were planning to take full control of the company sometime in the future.
European energy companies are seeking to expand into Germany's twenty billion dollar gas market as demand for the fuel rises, particularly from utilities. Eni and Germany's third-biggest utility beat rivals Duke Energy and BASF for GVS, which with regional suppliers serves seven hundred and fifty towns and cities.
“Eni hopes to use this acquisition to take advantage of future growth in the region and as a marketing springboard into neighboring German states,” said Gordon Gray, an analyst at J.P. Morgan & Chase, in a note to investors. Much of GVS's supplies are tied to existing long term contracts, he said.