Italy-based global energy infrastructure operator Snam signed an agreement with funds managed by Blackstone Tactical Opportunities for the purchase of a strategic stake of approximately 33% in Industrie De Nora S.p.A., a global supplier of clean energy and water treatment technologies, based on a 100% enterprise value of approximately €1.2 billion. The acquisition, whose completion is scheduled for the first quarter of 2021 after the relevant antitrust clearances, will be undertaken with own funds.
De Nora, an Italian company founded in 1923, offers sustainable solutions for various industrial processes and has significant growth prospects thanks to exposure to two megatrends in the energy transition, in particular the production of green hydrogen and water treatment.
With regards to hydrogen, De Nora’s strength stems from its position in the manufacture of electrodes for electrochemical industrial applications. The company has a consolidated leadership in numerous sectors. In particular, in the recent past De Nora launched its latest generation of electrodes, essential components to improve substantially the performances and the economics of hydrogen produced using alkaline water electrolysis (AWE) process.
With its technological leadership on electrodes, distinctive electrochemical competences and its consolidated supply chain, De Nora can benefit from the rapidly growing sector expectations and contribute to decarbonization, while making hydrogen production through water electrolysis increasingly competitive in economic terms.
Synergic to its electrode business, De Nora holds a 34% stake in ThyssenKrupp Uhde Chlorine Engineers (TKUCE), among the world leaders in the development, assembly and installation of alkaline water electrolysis and chlorine and caustic soda production. TKUCE AWE technology is involved in several large global hydrogen projects.
De Nora also collaborates with operators in the fuel cell sector, in particular since 2016 with AFC Energy Plc, a British manufacturer specializing in alkaline fuel cells.
De Nora is also a global leader in technologies for the treatment (disinfection and filtration) of water and for cathodic protection, both of which are businesses with potential synergies with Snam: for the activities of Snam4Environment, active in biomethane and in environmental and water solutions, and for gas transport.
The acquisition allows Snam to enhance its technological positioning to be increasingly competitive in new projects for hydrogen development. Alkaline electrolyzers are complementary to membrane electrolyzers (PEM), the sector in which ITM Power, a company with which Snam has recently signed a partnership, specializes.
The deal also allows both companies to benefit from their respective positioning on the market: Snam will be able to leverage De Nora’s commercial presence and know-how in the value chain; at the same time, Snam's position along the hydrogen value chain will be able to support De Nora’s commercial development.
De Nora generates revenues of more than €500 million per year (60% in electrodes, 40% in water treatment), with an expected EBITDA of €90 million in 2020 and an average growth (CAGR) of 8% over the past three years. The company is controlled by Federico De Nora.
Based on the agreements, which will be finalized upon completion of the operation, Snam will be able to appoint three directors of De Nora, and will be represented on the newly formed technical and strategic committees, with the possibility of seconding its staff to the company.
New investment platform. De Nora is positioned to be an international, technology-based listed company in the medium-term and it represents a potential seed asset for a new investment platform on the energy transition, Snam said. The objective of this new platform, which will be launched during 2021, is to respond to growing interest in clean energy and decarbonization. The platform will focus on a limited number of mature companies at the forefront of energy innovation and exposed to the megatrends of energy transition and decarbonization.
Snam will be the anchor investor of the platform. Through this new initiative, Snam will enhance its exposure to companies and projects relevant to decarbonization, with a limited and disciplined financial exposure. Snam is fully committed to its current risk profile and credit metrics while maintaining a strong focus on core business.