ERG Renew shares surge after buyout plan

By Stephen Jewkes

MILAN (BestGrowthStock) – Italian oil refiner ERG (ERG.MI: ) launched a 29 million euro ($38.9 million) buyout offer for its ERG Renew (ENRT.MI: ) unit on Tuesday to help fund growth, sending the division’s shares up 30 percent.

ERG, which owns about 77 percent of ERG Renew, said it would offer 0.97 euros per share, a premium of more than a third to its prior market price.

ERG, Italy’s second-biggest oil refiner, could delist the renewable unit, it said in a statement. It added that the offer was expected to be completed by the end of February.

“ERG is committed to the renewables business and does not want to sell the unit. The idea is to help fund growth and expansion,” a source close to the matter told Reuters.

This year ERG Renew paid around 240 million euros ($322 million) for the assets of Italian renewable company IVPC.

The source said the bid was an alternative to plans for a capital increase at ERG Renew of 200 million euros. The plan had been put on hold because of bad market conditions.

“If the offer is a success obviously the capital hike won’t go ahead,” the source said.

In July ERG Renew and Russia’s Lukoil (LKOH.MM: ) signed an agreement to work together in wind business development in Eastern Europe and Russia.

ERG has a put option to place its 51 percent stake in its ISAB refinery in Sicily with Lukoil from December at an agreed floor price of 1 billion euros

ERG said the funding of the buyout offer will have no effect on its dividend policy.

At 1608 GMT ERG Renew shares, which had been suspended from trade ahead of the statement, were up 30.31 percent at 0.9565 euros. ERG shares were up 0.58 percent at 10.47 euros while the STOXX Europe 600 oil and gas index (.SXEP: ) was up 0.81 percent.

(Additional reporting by Ian Simpson and Giancarlo Navach; Editing by David Holmes)

($1=.7454 Euro)

ERG Renew shares surge after buyout plan