Selling yourself short

The biggest Dutch energy firm Essent is on the verge of selling itself to Germany’s RWE, reports today’s Financieele Dagblad.

Essent is currently in local authority ownership and is being forced to divide itself into two by the government. One company which controls its network activities will remain in public hands clearing the way for the rest to be flogged off.
So why are local authorities so keen to dispose of this highly profitable company which booked sales of €7.4bn in 2007 and generated a good few million euros in profit for council coffers?
Essent says it needs a strategic partner in order to be able to better compete in Europe and declared in September it was open to offers from all-comers. Quite why Essent has to move into Europe is anyone’s guess. After all, the company is quite safe from the vagaries of the free market as long as it is in public hands.
Of course, Europe’s energy powerhouses are queuing up to get a good foothold in the Dutch market. RWE’s shareholders must be delighted.
And we should not forget that Essent’s top dogs will be free to benefit from private sector salaries and generous stock options if the deal goes through.
Alas, no-one has yet explained how Dutch consumers are going to benefit when their accounts are taken over by a German giant.

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