Naturgy, Sonatrach enter into an agreement to acquire 42.09% stake in Medgaz

Naturgy and Sonatrach have entered into an agreement with Mubadala for the acquisition of the 42.09% stake that it holds in Medgaz. Following the completion of the transaction, Medgaz will be entirely owned by Sonatrach (with a 51.0% stake) and Naturgy (with the remaining 49.0%), with a shareholder agreement that gives them joint control of the pipeline.

The transaction will allow Naturgy to transform its current 14.95% stake in Medgaz, from a financial investment with very limited governance rights, into to a strategic stake that will allow the joint control of the company together with Sonatrach. Naturgy will acquire 34.05% of Medgaz for EUR445 million (US$493 million) through a special purpose vehicle (SPV), which can be opened to a financial partner thus reducing Naturgy's equity contribution. The SPV will be funded with a non-recourse loan of EUR260 million (US$288 million) to optimize its capital structure.

The completion of the transaction, expected to occur prior to the end of March 2020 subject to compliance with certain conditions and approvals, will not impact the company's share buyback program commitment of its Strategic Plan.

Medgaz is responsible for the design, construction and operation of the deep-water gas pipeline from Algeria to Europe through Spain.