Government defers Bord Gáis sale after bids fall short

The Government has deferred the sale of Bord Gáis’s retail and energy arm after the three bids received for the business fell short of the asking price.

Minister for Communications, Energy and Natural Resources Pat Rabbitte said today none of the bids received for Bord Gáis Energy were at "an acceptable value".

The Government had been planning to sell the State company’s energy unit as part of an overall programme of asset disposals agreed with the EU-IMF troika.

The sale was expected to net the exchequer between €1 billion and €1.5 billion.

Mr Rabbitte said the sale process attracted significant interest from a broad range of potential international acquirers, which he said, reflected the positive international sentiment towards Ireland.

However, he said the current conditions in the power and commodity markets were not favourable.

“The Minister for Public Expenditure and Reform and I have been clear from the outset of the offer process that Bord Gáis Energy would only be sold if a sale price was achieved which fully recognises the inherent value of the business,” he said.

Mr Rabbitte said his department and New Era, the state agency that is advising the Government on the process, will continue to work with Bord Gáis to complete the separation of Bord Gáis Networks and Bord Gáis Energy in accordance with EU energy law.

He also said the department would continue investing in and developing the State company’s energy business and to review options for its future.

It was reported earlier this week that three bids, each in the region of €1 billion, were submitted for Bord Gáis Energy ahead of Monday’s deadline.

It is understood the bids were from Blackstone, the private equity giant; Viridian, the Northern Ireland energy firm that owns Energia; and the UK utility Centrica, which bid in partnership with the Canadian renewable energy investor Brookfield Asset Management.

“Given the fact that we have some head room now because of improved economic circumstances, we are not being forced to sell,” Mr Rabbitte told RTÉ Radio’s Today with Sean O’Rourke programme.

“We are certainly not going to dispose of a valuable state asset unless we get value,” he added.

“The fact of the matter is this is a valuable energy business in a growing and thriving company.”

Alan McQuaid, chief economist at Merrion Capital, said: “The decision speaks for the confidence the government now has to say no to an unfavorable deal”. “The government had always made it clear that this wouldn’t be a fire sale,” he added.