Big energy firms set to merge

Holland’s two biggest energy concerns Essent and Nuon (both owned by local governments) are on the verge of announcing a merger according to press reports today.

According to ‘well informed sources’ the companies have reached agreement on the main issues involved: the shareholders of Essent will own between 50 and 60 percent of the new combination, the merged company will headed by Essent chief Michel Boersma and its head office will be located in Amsterdam.
However, today’s Het Financieele Dagblad warns that not all Essent and Nuon’s shareholders are positive about a merger which the two firms say is necessary to avoid being taken over by large foreign energy concerns.
A merged ‘national energy champion’ would have 4.5 million electricity customers, representing 60 percent of the Dutch market.
Essent’s biggest shareholder, the province of Noord-Brabant (31%), is not convinced a merger is necessary and the province of Friesland (13% stake in Nuon) believes a merger would be bad for consumers, bad for shareholders and bad for employees with thousands of job losses. The Frisian government said it would prefer a British or Scandinavian concern to take over the commercial activities of Nuon.
This will be possible if the new Segregation Law (which splits energy companies into two separate firms, one for the commercial production/supply/trading activities, the other for distribution) is passed by the Senate on 14 November.
Essent and Nuon are fiercely opposed to the new legislation and some observers believe the latest news that a possible merger may be near completion is an attempt to influence political decision-making. The Volkskrant however reports that the two companies want to merge whatever the upper house of parliament decides.

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