Hungary's state utility giant buys E.ON’s energy supply operations in Romania

State-owned Hungarian energy group MVM has agreed to acquire a majority stake in E.ON's retail and customer solutions business in Romania, MVM said on December 16.

Under the agreement, MVM will acquire a 68% stake in E.ON Energie Romania, which has close to 3.4mn customers, and a 98% stake in regional service provider E.ON Asist Complet. The transaction is expected to be closed in the first half of 2025, pending approvals from the competent authorities.

E.ON had previously engaged in negotiations with Romgaz and OMV Petrom, but MVM later emerged as the likely buyer. 

The Romanian unit of E.ON incurred a RON356mn (€71mn) loss on RON13.7bn revenue in 2022.

The transaction value has not been disclosed. MVM said the transaction could strengthen its regional positions and E.ON said that it would now be able to focus on key strategic areas, contributing to the energy transition in Europe.

In an interview with Index.hu earlier this year, MVM CEO Karoly Matrai stated that the company aims to become the leading energy provider in the region by 2035. Serbia, Romania and the Balkans are expected to be key areas of focus in MVM's expansion plans, though securing LNG capacity in Germany or Poland is also a possibility.

While Hungary remains MVM’s primary market, the company currently serves 1.5mn retail customers in the Czech Republic, holding a 40% share of the natural gas market and 10% in Slovakia.

Strict evaluation 

Romania’s Ministry of Energy said in a statement that “although the supply component does not include critical infrastructure elements, the Romanian state will use all legal levers for the strict evaluation of this possible transaction”. 

“The complex structure of MVM's commercial relationships and sources of capitalisation, including the Hungarian company's capital flows, especially from outside the European Union, will be analysed,” the Romanian authorities said.

The screening will be routine, Energy Minister Sebastian Burduja stated, speaking of “national interest” and “protecting critical infrastructure”. 

“We have a single objective: protecting the national interest. Beyond the competition analysis, we will also verify all elements regarding energy security and compliance with the fundamental principles of protecting critical infrastructure and the internal energy market. Romanian energy companies must dare more, not only on the local market, but also at regional level,” said Burduja.

“We are open to collaborations that will strengthen Romania's role as a strategic actor in the European energy sector. Romania remains a pillar of stability in the region and a guarantor of energy security. We will continue to defend our strategic interests firmly and promote regional cooperation. Energy is about more than electricity and natural gas. It is about the safety of our families, about national independence and about our European future. These things are not negotiable.” 

Outlook revised 

In related news, Fitch Ratings revised the outlook on MVM's long‐term issuer default ratings (IDR) to stable from negative and affirmed the IDR at BBB. The rating actions followed the revision of the outlook on Hungary's BBB sovereign rating to stable from negative on December 6.

Fitch highlighted that the improved outlook reflects both the positive adjustment to Hungary's sovereign rating outlook and MVM's stable credit profile. The company's integrated position across various segments of Hungary's electricity and natural gas markets also played a role in maintaining its rating.

MVM's funds from operations (FFO) to net debt ratio will remain consistent with the company's BBB rating during the 2024-2026 period, it said, adding that the company’s business plan projects a net debt ratio of up to 2.5 times to EBITDA, in line with the criteria for the BBB rating.

MVM's revenue fell 22% year on year to HUF2.2 trillion due to lower gas and electricity prices and after-tax profit rose 6% to HUF222bn in H1.