Total’s acquisition of Poweo shakes up the Belgian energy market

The news broke this morning: oil giant Total (which had already turned heads by buying the Liège-based 100% green energy company Lampiris) has laid claim to Poweo, the Belgian subsidiary of the French energy supplier Direct Energie.

Total’s acquisition of Direct Energie: 1.4 billion euros for a 74% stake

A tidy sum: Total’s acquisition of 74.33% of the shares in the French alternative producer and supplier of gas and electricity is costing it 1.4 billion euros. The oil giant will then launch a mandatory public offer for the shares, listed on the Paris stock exchange, for €42 per share, valuing the whole company at some 1.9 billion euros (2.5 billion including Direct Energie’s debts). The administrative board, which unanimously approved the purchase, should recommend that the remaining shareholders sell their holdings (subject to confirmation that the public offer is fair).

Objective: establishing a position in the Belgian and French gas and electricity markets

Total had already attracted attention in 2016, when it acquired Lampiris, the Liège supplier of green electricity. The clash between the oil company’s values and the eco-friendly image of Lampiris caused an outcry.

Today, the acquisition of Direct Energie (along with its Belgian subsidiary Poweo) enables Total to consolidate its position in the domestic market, which it entered last year under the name “Total Spring” (in France). Its ultimate goal is to develop its position in the gas and electricity distribution sector in Belgium and France.

The French energy market, liberalised in 2007 (the same year as Wallonia and Brussels), is still dominated by the historic monopolies EDF and Engie (formerly GDF Suez). Direct Energie, launched during the peak of market deregulation in 2003, had managed to carve out a share of the cake, occupying third place in the electricity market and fourth in the gas market.

By purchasing Direct Energie, Total has thus acquired its main competitor along with 2.6 million additional customers. It now has four of the six million customers it hopes to attract in France by 2022, not to mention the million it is targeting in Belgium.

Total’s acquisition of Poweo: what will be the impact on Belgian consumers?

In Belgium, the purchase of Direct Energie by Total prefigures a probable merger between Lampiris, the green gas and electricity supplier, and Poweo, the electricity and gas provider.

Direct Energie’s Belgian subsidiary, which has 60,000 domestic and business customers, will thus be added to the million customers acquired by the oil multinational through the Lampiris buyout. In 2016, coincidentally or not, the announcement of that sale led 80,000 Lampiris customers to switch their energy supplier. Lampiris tumbled down the Greenpeace rankings (FR), falling from a score of 14/20 to 8/20.

Poweo, which currently enjoys two suns and a score of 14/20 (due to its 99% investment in renewable energy) may well suffer the same fate. As for the question of possible price rices, the contract terms are not changing and Poweo’s customers, like Lampiris’s before them, should not suffer any increases in their energy bills – at least for the moment!

French Sources:

• Total met la main sur Direct Energie (boursier.com) ;
• Total rachète Direct Energie et sort déjà 1,4 milliard d’euros (lalibre.be) ;
• Total frappe un grand coup sur le marché de l’électricité (lesechos.fr) ;
• Total va acheter 74% de Direct Energie pour 1,4 milliard d’euros (lemonde.fr).