Total shares are moving higher Wednesday, as the French energy provider announced an agreement to purchase a majority stake in power retailer Direct Energie. The deal will see Total purchase 74.33% of the firm for €1.4 billion as it seeks to become a bigger player in the French energy retail market.
By 1030 BST, Total shares were 1.15% higher at 49.32. That’s the highest level of the stock for over three years. Direct Energie shares, meanwhile, surged 30.46% to hit €42.06 on the news.
French energy supplier Total announced the details of the agreement earlier Wednesday. It has agreed to buy Direct Energie for €42 per share, a 30% premium on Tuesday’s closing price and some 24% above the three-month stock price average.
“Through this transaction, Total is actively pursuing its development in electricity and gas generation and distribution in France and Belgium,” said Total Chairman and CEO, Patrick Pouyanné.
“This friendly takeover is part of the Group’s strategy to expand along the entire gas-electricity value chain and to develop low-carbon energies, in line with our ambition to become the responsible energy major”, he added.
And, according to a Reuters report, Direct Energie’s CEO Xavier Caïtucoli is set to remain head of the firm as the takeover occurs and it integrates into Total.
Total to expand energy customer base
Total’s planned purchase of Direct Energie comes as the energy provider seeks to increase its stake in the French and Belgian energy retail market.
At present Total supplies some 1.5 million clients. With the majority share purchase of Direct Energie, it will add 2.6 million customers to its portfolio.
“This combination will enable Total to pursue its ambitious development program to become a standard-setting player in electricity supply in France and Belgium, targeting over 6 million customers in France and more than 1 million customers in Belgium by 2022,” Total said in its press release.