Italian Gas Firms Eye $8.7b Merger

Italian Gas Firms Eye $8.7b MergerItalian Gas Firms Eye $8.7b Merger

Italian state lender CDP is considering whether to merge Italy's two top gas distributors with joint assets of roughly $8.7 billion (€8 billion) as the sector gears up for major reform, four people familiar with the matter said.

CDP (Cassa Depositi e Prestiti) controls Italy's biggest gas distributor Italgas through gas grid operator Snam. CDP is also a shareholder of infrastructure fund F2i that bought into No. 2 player 2i Rete Gas in 2009 and now holds 72%, Reuters reported.

"These are early stage discussions, but the idea is on the table," said one source, cautioning that no deal was certain and talks could still fall apart.

A second source said the merger of Italgas and 2i Rete Gas was CDP's favorite plan but other options, including a stock market listing of Italgas, were being considered because of the risk a merger might not be approved on antitrust grounds.

A combination of Italgas and 2i Rete Gas, which together had revenues of about €1.8 billion in 2014, would hold some 50% of the Italian gas market.

CDP revamped its top management in July to get more closely involved in government projects to boost growth and upgrade infrastructure. But CDP is in no rush to finalize a merger of Italgas and 2i Rete Gas since the board of Italgas parent Snam, including longstanding CEO Carlo Malacarne, is up for renewal, two sources said, adding that advisers for a deal have yet to be appointed.