Snam, acquisition of Germany's Open Grid Europe postponed

Snam's German campaign is moving towards a postponement. The closing on the purchase from Infinity Investments (Abu Dhabi) of 25% of Open Grid Europe, the largest independent gas transmission operator in Germany, was in fact scheduled to take place by the end of September, but everything suggests that the deadline will not be met. Indeed, on the transaction - concluded by former CEO Stefano Venier in April, just a month before being replaced by Agostino Scornajenchi - Snam and its shareholders are said to have begun an in-depth review. It is difficult to say where these evaluations will lead: the road is marked out by binding agreements, but the picture is fluid. There are those in the market who maintain that the deal, albeit with delays, will be finalised, but also those who go so far as to hypothesise, as an extreme scenario, a resounding dietrofont. Certainly, the concerns expressed in the summer by the German government over the presence (albeit a minority one) of the Chinese State Grid in Cdp Reti, in turn a controlling shareholder of Snam, have contributed to complicating a picture that, in recent times, on the Rome-Berlin axis has recorded two other hot dossiers such as Mfe-Prosieben and Unicredit-Commerzbank.

The transaction was subject to three conditions precedent: the OK of the German Antitrust Authority, the non-exercise of pre-emption by the other shareholders of the Luxembourg holding company controlling Open Grid Europe (Belgium's Fluxys, British Columbia Management, and Munich Re), and Berlin's approval under German foreign investment law. The latter, a de facto Golden Power, is currently the real node in the path towards closing. In the summer, the German authorities asked Snam for numerous additions to the documentation previously provided - the 12,000 km of Open Grid Europe's network is considered crucial both for Germany's energy security and for its transition path towards renewables and hydrogen - and this has inevitably led to a lengthening of the timeframe.

At the same time, it is physiological that Snam's top management, once it has taken office, has begun evaluating the dossiers on the company's table, including, of course, those inherited from the previous management, and of a certain size, such as Open Grid Europe, which has an equity value of EUR 920 million, about one-third of the group's total 2024 investments. In-depth reflections, still in progress, shared by the controlling shareholder.

Moreover, among some insiders, but also in government circles, the Open Grid Europe operation is not entirely convincing. There are those who point out how the company, at a very delicate time in terms of geopolitics and energy autonomy, should focus almost all its investments in Italy (as has been the case in recent years), especially since most of its revenues come from regulated activities. Moreover, beyond the appropriateness on the part of the old management to close a deal of this magnitude (on which, however, it had been working for over a year) at the end of its term of office, there are those who point out that the 25% taken over by Infinity Investments risks turning out over time to be more of a financial investment than an industrial one, at least in the scheme currently envisaged. Venier had described it as 'a fundamental step in Snam's pan-European strategy', stretching from Algeria to the North Sea. However, it is noted in the market that without proper governance and management of Open Grid Europe truly shared with the other industrial partner, the Belgian company Fluxys, the Italian group is unlikely to be able to extract the true strategic value of this stake. The opportunity would be interesting: Germany and Central and Eastern Europe, with the gradual decline in Russian supplies, are hungry for gas and Snam - between regasified LNG, Tap and Algeria - can transform Italy into a crucial hub for the Old Continent. All the more so since, by reversing the flows from South to North, it would make it possible to 'unbottleneck' our country and lower domestic gas prices because logistics costs would be spread out. Open Grid Europe could therefore play a role here, but only with the right governance framework. Today, however, the picture is still evolving: with Berlin starting to raise the barricades and the timeframe getting longer, all options are open.