TotalEnergies has accelerated its gas-to-power integration strategy by signing an agreement to acquire 50% of EPH’s flexible power generation platform in Western Europe in a €5.1bn ($5.92bn) all-stock transaction.
The deal includes assets in Italy, the UK, the Republic of Ireland, the Netherlands, and France.
Under the deal, EPH will be paid entirely in new TotalEnergies shares, receiving 95.4 million shares priced at €53.94 each. The issuance represents about 4.1% of TotalEnergies’ share capital.
The transaction will establish a joint venture (JV), owned equally by TotalEnergies and EPH, to manage the assets and drive business development.
Additionally, by leveraging TotalEnergies’ position in supplying liquified natural gas (LNG) to Europe, the deal will help diversify value creation across the gas value chain, particularly between the US and Europe.
The transaction is expected to add net electricity production of approximately 15TWh per year, enabling TotalEnergies to capture added value equivalent to about two million tonnes per annum of LNG.
The portfolio comprises over 14GW gross capacity of operational or under-construction flexible generation assets, including gas-fired power plants, biomass power plants, and battery systems.
These assets benefit from secured capacity revenues, which account for around 40% of the gross margin.
The acquisition scope also covers about 5GW of projects under development.
The JV is set to become the preferred vehicle for TotalEnergies and EPH to drive flexible power generation growth in the targeted countries.
Over the next five years, TotalEnergies anticipates an increase in available cash flow of about $750m per year, exceeding the additional dividend associated with the newly issued shares.
The Integrated Power segment is expected to generate positive free cash flow and contribute to shareholder returns as early as 2027, compared to 2028 previously.
Due to this accelerated inorganic growth, TotalEnergies is lowering its annual net capital expenditure guidance by $1bn per year to $14-$16bn per year for 2026-2030, with $2bn to $3bn allocated to Integrated Power while maintaining its 2030 electricity generation target of 100-120TWh.
TotalEnergies chair and CEO Patrick Pouyanné said: “This acquisition marks another major milestone in TotalEnergies’ strategy to build an integrated electricity player in Europe.
“By joining forces with EPH as part of a long-term partnership, we are accelerating the implementation of our Integrated Power strategy and strengthening our ability to provide reliable, competitive, and low-carbon energy to our customers by leveraging the complementarity of our renewable and flexgen portfolio.
