Bouygues wins the auction for Engie’s energy services business

The French public group Engie has selected a 7.1 billion euro bid from the conglomerate Bouygues to buy its energy services division, after a difficult auction that took a political advantage six months before the presidential elections.

Bouygues, controlled by billionaire industrialist Martin Bouygues and his family, beat the American Bain and the French Eiffage, a civil engineering company.

The battle for Equans, which undertakes energy efficiency and facilities management projects for corporate clients, had raised questions among rival bidders over who the government would back and whether foreign suitors would stand a chance.

With a stake of almost 24% in the public service Engie, giving it three of the 14 seats on the board of directors, the French state played an important role in choosing the winner. Equans’ status as a large employer, with more than a third of its 74,000 employees in France, added to the sensitivity of the sale.

Seven bidders were originally in the running, including several international private equity firms, some of which alleged that foreign investors were being overlooked. They wondered if the state favored Bouygues given that the group has many government contracts and that Martin Bouygues is a long-time ally of President Emmanuel Macron.

Engie announced on Saturday that it would enter into exclusive negotiations with Bouygues and that the agreement should be finalized in the second half of 2022.

Engie’s chief executive, Catherine MacGregor, told the Financial Times that Bouygues made the highest bid. She said her proposal fit in well with Equans’ culture and that she “really placed herself among all the offers and made it an almost easy decision.”

Asked about the backbiting surrounding the deal, MacGregor said the sale sparked “a lot of competition” among bidders, but the process had been rigorous.

“This allows us to streamline the group to grow our core businesses, including renewables,” MacGregor said of the divestiture.

Engie, which was trying to refocus its sprawling structure, also sold a stake in waste and water management to Suez last year as it raised funds for investments.

The acquisition of Equans is the largest acquisition ever made by Bouygues. When finalized, Equans will become its largest division, adding around € 12 billion in annual revenue and representing just under a quarter of the larger group.

Martin Bouygues said the agreement was “very good news” and “paved the way for us to create a new world leader in multitechnical services, with strong roots in France”.

Bouygues is betting it can benefit from a wave of post-Covid infrastructure spending plans from the United States to Europe.

He pledged not to lay off any workers in Europe for five years after the deal was struck and pledged to create 10,000 more jobs during that time.

Equans, a newly created division within Engie, brings together a myriad of companies that install refrigeration and heating systems or specialize in the electrification of transport networks. The business is labor intensive and has been hit by shortages and hiring difficulties.

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