Shell loses out as Mitsubishi buys Dutch power firm Eneco

Anglo-Dutch energy giant beaten by Japanese rival

Eneco will be acquired by a consortium of business led by Japan’s Mitsubishi Corporation in a deal valuing the Dutch energy company at €4.1bn ($4.5bn, £3.5bn). Royal Dutch Shell (RDSA) and the private equity group KKR (KKR) were also contending to acquire the firm.

Eneco is owned by 44 Dutch municipalities and is increasingly focused on renewable energy. Although its board and a committee representing shareholders have backed the deal, final approval must still be sought from the municipal investors.

Guido Dubbeld, the firm's chief financial officer, told journalists that if the deal does go through then the consortium led by Mitsubishi will invest €1bn ($1.1bn, £0.85bn) in Eneco’s operations in the Netherlands, Germany and Belgium by the start of 2024.

Takehiko Kakiuchi, Mitsubishi chief executive stated: “Eneco fits perfectly with our current energy activities and offers us a platform from which to grow further in the European market.” The deal will give Mitsubishi 80 per cent of Eneco and its partner Chubu a 20 per cent stake.

Eneco are thought to have opted for Mitsubishi over other interested parties due to the Japanese giant’s promises that it will maintain its corporate identity and not continue its strategy.

Shell in particular will be disappointed to miss out on the deal, not least because Eneco is a Dutch company, but also because it is currently looking to expand and improve its renewable energy division.

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As the sentiment against fossil fuels grows, Shell is seeking to diversify from its bread and butter, oil and gas. Instead it hopes to become a major power generator in Europe by 2030. It currently plans to spend an average of $2-3bn a year on energy transition investments from 2021 onwards.

Shell’s New Energies director Maarten Wetselaar reacted to Eneco’s decision, stating that Shell will “continue to look for opportunities in the energy transition.”

Oil and gas major Shell had teamed up with Dutch pension fund manager PGGM in its bid to buy Eneco.

FURTHER READING: Shell profit slump could slow $25bn share buyback timetable

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