Taqa's shareholders approve AD Power deal

Offer implies an equity value of Dh4.16bn for Taqa

ADPower will own 98.6 per cent of Taqa shares following the deal, but a follow-on share offer could be made to broaden the company's investor base. Courtesy Taqa

Shareholders of Abu Dhabi National Energy Company, also known as Taqa, voted in favour of a deal that will combine its assets with those of Abu Dhabi Power Corporation to create a regional utilities champion.

The deal, effectively a reverse takeover, will see ADPower transferring the majority of its water and electricity generation, transmission and distribution assets to Taqa worth about Dh120bn in return for shares, while a land lease agreement between the two firms will be cancelled.

ADPower will receive more than 17.5 shares for every Taqa share owned, giving it a 98.6 per cent stake in the new organisation. The offer implies a current equity value of about Dh4.16bn for Taqa. The company's directors approved the transaction earlier this month, but the deal is still subject to regulatory approval and is expected to close in the third quarter of this year.

“This is a transformational deal for Taqa. We have complementary domestic and strong international footprints in the UAE, EMEA and the Americas, and this move gives us the financial muscle and expertise to capture new opportunities in the future," said the company's chief executive, Saeed Al Dhaheri.

The merger will form one of the biggest utilities companies in the Middle East, as well as one of the largest listed companies by market capitalisation in the UAE. It will have operations in 11 countries and a capability of generating 23 gigawatts of power and 320 billion gallons of water per year. It will also have oil and gas operations in Europe, North America and Iraq.

Taqa said it will also consider a follow-on public offering on the Abu Dhabi Exchange to diversify its shareholder base. The complementary nature of its wider operations means it will be well-positioned to pay consistent dividends to shareholders in the future, it said. More than 85 per cent of its revenue will come from regulated and long-term contracted businesses.

ADPower is one of more than 25 businesses held by state-owned ADQ, formerly known as Abu Dhabi Developmental Holding.

“As ADQ seeks to harness and enhance the value and diversity of our investment portfolio to drive Abu Dhabi’s economic growth and prosperity, this transaction demonstrates what that means in highly visible and practical terms," Mohamed Alsuwaidi, chief executive of ADQ, vice-chairman of ADPower and a board member of Taqa, said.

"The energy and power sector remains core to Abu Dhabi’s economy, and is still one of its most strategically important and most potent as a generator of revenue and a multiplier of value."