TotalEnergies (TTE) Acquires Total Eren, Adds Renewable Assets
TotalEnergies TTE announced that it has completed the takeover of renewable energy company Total Eren by increasing its stake in the latter from 30% to 100%. The agreement was built upon the deal that both companies signed in 2017, which gave TTE the right to acquire Total Eren (formerly EREN RE) after five years.
According to the details of the transaction, Total Eren is valued at an Enterprise Value of €3.8 billion ($4.2 billion) based on an EBITDA multiple negotiated in 2017. The acquisition of 70.8% represents a net investment of around €1.5 billion ($1.66 billion) for TTE.
The contribution from the acquired asset is expected to boost TotalEnergies’ Integrated Power net operating income by nearly €160 million ($177.1 million) and cash flow from operating activities by almost €400 million ($442.7 million) in 2024.
Clean Energy Focus
TotalEnergies, which aims to achieve net zero by 2050, had a gross renewable electricity generation installed capacity of 18 gigawatts (GW) as of Mar 31, 2023. The Total Eren deal and the recently announced deal to buy a 50% stake in Rönesans Enerji to develop renewable projects in Turkey will help TTE expand its renewable portfolio.
Globally, Total Eren operates 3.5 GW of renewable energy capacity and boasts solar, wind, hydroelectric and storage project pipelines of over 10 GW in 30 countries. To build its integrated power strategy, TTE will leverage Total Eren's 2 GW of operational assets in merchant countries like Portugal, Australia, Greece and Brazil. This acquisition is most likely to boost TTE’s renewable asset portfolio.
TotalEnergies has a portfolio of gross renewable capacity under construction and is on track to develop 35 GW by 2025, with more than 20 GW already having long-term power purchase agreements. The company is gradually building a portfolio of low-carbon businesses that could account for 15-20% of sales by 2040.
Price Performance
Over the past year, shares of TTE have increased by 18.7% compared with the industry’s growth of 8.9%.
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Zacks Rank & Key Picks
TotalEnergies currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same sector are Murphy USA Inc. MUSA, TC Energy Corp. TRP and Kinetik Holdings Inc. KNTK, each carrying a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Murphy’s 2023 earnings per share has moved north by 7.5% in the past 60 days. The stock boasts a four-quarter average earnings surprise of 15.56%.
TC Energy’s long-term (three- to five-year) earnings growth rate is pegged at 4%. The stock boasts a four-quarter average earnings surprise of 2.06%.
Kinetik’s long-term earnings growth rate is pegged at 13.3%. The Zacks Consensus Estimate for 2023 sales indicates an increase of 8.5% over 2022’s reported figure.
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