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Investments, divestments and M&A

Hera's business model was designed to be "open" to external growth, with an inclusive governance that allows the group of shareholders to be widened, taking in new shareholders in exchange for the contribution coming from their business activities. The Group's diversified set of shareholders, unique in the multi-utility sector, facilitates this kind of expansion.

Hera's history demonstrates the effectiveness of the model for expansion that has allowed the Group to quintuple its size over 17 years, since its establishment, with a significant contribution coming from M&As (40% of growth created with M&As).

Merger and Acquisitions

The strategy of expansion through M&As represents an important source of value creation. Since the transactions were carried out with non dilutive multiples, shareholders can rely on the extraction of synergies (which lead to the creation of value) from mergers that make the most of scale economies and cross selling. In the past, this strategy has guaranteed an average increase in the Ebitda of merged companies coming to +25% in less than 5 years.

The strategy of external growth through M&As marks the transactions with "Mono-business" target companies and "Multi-utility" companies.

In the first case, Mono-business companies mainly include those involved in free market activities (waste treatment and energy sales) and generally owned by private entrepreneurs, which allows a transaction for a "cash" acquisition. As regards the geographic scope, even though the market is national and not local, Hera concentrates its areas for potential expansion along the Adriatic coast for activities in Commodity sales. In the waste treatment market, instead, the scope is national, since plants that are close to the customer are strategic (to reduce costs in logistics). Hera is indeed the nation's leader in this sector, by quantity of plants and volumes managed.

In the second case, Multi-utility companies are mainly owned by local authorities (Municipalities), with geographically localised activities that often concern concessions for services (water, waste collection, gas and electricity distribution). The geographic scope involves areas bordering with the reference area, i.e. North-Eastern Italy (Emilia-Romagna, Marche and Triveneto regions), since the speed and amount of the synergies that can be extracted from mergers are increased by geographical proximity. These transactions can take the form of mergers with the "partner" company in which the owners generally prefer to become Group shareholders. These transactions are usually carried out with exchanges of shares between the parties.

Hera will continue to focus on M&A transactions, selecting investments that offer potential synergies and are complementary to the Group's current activity portfolio: particular attention will go so selecting the targets (multi-utilities, in addition to companies involved in energy sales and waste treatment) in parts of the nation held to be strategic for each activity.

The projections included in the new plan to 2023 are based on a market analysis and the Group's track record. The goal for 2023 is for growth through M&As to contribute to Ebitda with +107m€, equivalent to an annual average of +21.4m€, in line with the annual average recorded over the last 16 years. This objective, moreover, has already partially been reached, through the finalised transaction with Ascopiave in 2019 (which contributes with +38m€ to growth in Ebitda, beginning in the current year). The ways in which this target will be reached depend on the opportunities offered by a market which is still highly fragmentary and contains an excessive number of small-medium enterprises with a sub-optimal size, that have difficulty in remaining effectively and efficiently on the market. The wide range of options concerns all sectors in which the Group is active, i.e. multi-utilities, energy sales or waste treatment.

Plan to 2022

Constant M&A contribution to Ebitda

M&A track record

CompanyBusiness/ActivitiesPress release/Presentation% stake
EstEnergy (Joint Venture with Ascopiave)Electricity and gas sales19/12/201952%
Pistoia AmbienteWaste management services30/07/2019100%
Cosea AmbienteWaste services09/05/2019100%
CMV ServiziGas distribution26/02/2019100%
CMV Energia e ImpiantiElectricity and gas sales26/02/2019100%
SangroserviziElectricity and gas sales20/03/2018100%
Megas.netGas distribution07/03/2018100%
Blu RantonElectricity and gas sales08/02/2018100%
TesecoWaste services30/01/17100%
AliplastWaste services11/01/17100%
Gran SassoElectricity and gas sales06/10/16100%
Julia servizi piùElectricity and gas sales08/04/16100%
Geo NovaWaste services29/12/2015100%
Waste RecyclingWaste services23/12/2015100%
Alento gasGas sales26/01/2015100%
EcoenergyWaste services27/11/2014100%
Amga UdineMulti utility25/06/2014100%
Fucino gasGas sales 13/01/2014100%
Est Reti ElettricheElectricity distribution12/12/2013100%
Isontina Reti GasGas distribution30/09/2013100%
Analyst presentation
SadoriGas sales14/04/201150%
EnomondoBiomass combustion plant11/01/201140%
Tamarete EnergiaCCGT17/12/200832%
Megas TradeElectricity and gas sales28/07/2008100%
Marche MultiserviziMulti-utility23/07/200741.8%
Enel electricity distribution grid in ModenaElectricity distribution27/06/2006
Geat Distribuzione GasGas distribution29/06/2006100%
Meta SpAMulti-utility24/06/2005
Analyst presentation
Ecologia AmbienteWTE06/07/2004
Analyst presentation
Calenia EnergiaCCGT28/09/200415.0%
Agea SpAMulti-utility27/07/2004
Analyst presentation

Hera Group's focus on core business areas (Water, Waste, Energy) and streamlining of company structure has resulted in a major divestment/rationalization policy.

Divestments/rationalizations are underpinned by the following strategies:

  • Streamlining/financing development
  • Organizational focus

The numerous rationalization operations were in response to the need for a more efficient governance structure able to deliver significant cost savings.

2002: Hera Group is the results of more than 38 mergers and acquisitions; 2018: Hera Group after 16 years of mergers

Divestments: track record

20103343 13
2009111284 35
20086171 15
20076263 17
200624373 37
2005233182 46
2004144290 47
2003264110 41

Page updated 10 January 2020

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