MOL signs agreement to purchase 100% of Italiana Energia e Servizi (IES) in North Italy

abarrelfullabarrelfull wrote on 05 Oct 2013 07:52

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MOL Plc. hereby announces that on 30 July 2007 it signed an agreement to purchase 100% of Italiana Energia e Servizi (“IES”) after winning a 6-month long competitive auction process. The purchase price is in line with EV/EBITDA multiples in relevant precedent transactions and is in line with MOL’s downstream long term return target of 16%. The exact purchase price will be calculated based on a balance sheet to be prepared as of closing and is subject to several adjustment items. The final purchase price will be disclosed after closing, also in conformity with the confidentiality undertakings in the transaction documents. The closing of the transaction is subject to anti-monopoly approval and is expected to happen in Q4 2007.

IES is an Italian refining and marketing company, which owns the 2.6 mtpa Mantova refinery with a favourable location in the middle of the industrialized North-Italian region. The refinery processes heavy crude oil supplied via a 124km long pipeline owned by IES from the Marghera Port, it has a Nelson Complexity Index of 8.36 and had a utilization rate of 96% in 2006. The company markets 2.5 mt of petroleum products mainly in North-Eastern Italy. IES Group currently has 165 retail stations (of which 30 are company owned) located mainly in the supply radius of the refinery. The refinery’s production provides a good basis for further retail expansion in the region to enhance downstream integration and increase profitability along the supply chain. The products meet the current EU standards of 10 ppm gasoline and 50 ppm diesel. Investments to comply with 2009 product specifications (10ppm diesel) are currently underway. The refinery yield is oriented towards middle distillates at 47% of the current output, while the light distillate yield stands at 17%. IES reported EUR 98 million EBITDA on EUR 1,295 million sales in the fiscal year ending on 30 June 2006. Its net profit was EUR 43 million during the same period. IES had a net debt of EUR 309 million as of June 2006.

By purchasing IES MOL enters into a new market (North Italy) adjacent to our current focus areas of Croatia, Austria and Slovenia. Thus it can serve as a basis to build a strong presence in the highly developed industrial North Italian region and also a stable base to investigate further expansion towards the Mediterranean and South Europe. In the long run it can provide significant upside potential by exploiting synergies with our current asset base (for example joint sales optimization).

As MOL operates the two most efficient refineries in Europe today, we see good opportunity to transfer our knowledge and experience in improving the profitability of the refining and marketing operations of IES. We intend to use our experience to deliver considerable efficiency gains to the new business. Through a development programme with CAPEX of EUR 130 million in the next 5 years we intend to increase the operational capacity of the refinery to 3 mtpa with a corresponding increase in the crude pipeline capacity. We are committed to find the solution to improve considerably the product slate boosting the highly demanded middle distillate yield.

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