Centrica share price: Joint venture with North Sea rival falls apart

An ambitious tie-up between Centrica (LON:CNA) and France’s Engie fell apart weeks before the British Gas owner unveiled a surprise fundraising, The Sunday Times has revealed. The FTSE 100 group announced plans to tap shareholders for £750 million last week in a move to reduce its debt pile.

Centrica’s share price has slipped into the red in London this morning, having shed 0.62 percent to 208.60p as of 09:09 BST, and underperforming the benchmark FTSE 100 index which has climbed into positive territory and currently stands 0.27 percent higher at 6,142.20 points. The group’s shares have lost nearly a quarter of their value over the past year, and are down a little over four percent in the year-to-date.

The Sunday Times reported yesterday that Centrica was understood to have agreed a deal in principle to combine its North Sea oil and gas production arm with that of France’s state-owned utility Engie. The joint venture would have created a multi-billion-pound producer with large operations in the UK and Norway, and would have alleviated some pressure on the FTSE 100 group’s balance sheet. Sources close the situation told the newspaper that CIC, China’s sovereign wealth fund which owns 30 percent of Engie’s production business, had voted down the deal.
The report of the failed tie-up follows Centrica’s surprise fundraising last week when the British Gas owner launched a £750-million cash call in an effort to lower its net debt. The move, however, sent Centrica’s share price tumbling.
“Management have been trying to establish a reputation for tight capital management,” analysts at Jefferies said last week, as quoted by The Sunday Times, adding that it was “difficult to say” whether the cash call announcement enhanced or diminished that reputation.
As of 09:28 BST, Monday, 09 May, Centrica PLC share price is 207.95p.