FOLLOWING months of speculation Bord Gáis has bought the West Cork-based SWS Natural Resources business for a total cost of €500 million, including debt of €245m.
This is a strategic move for the group, achieved for a lot less money than had been speculated in the run-up to the announcement.
It was reported during the intensive bid period that the sellers of the business, Ion Equity, were hoping to get €800m.
Group chief executive John Mullins described the deal as good news for Cork and for the town of Bandon where the renewable wind energy firm is based.
The acquisition will strengthen the group’s asset base and “provide us with the renewable energy resources to meet the needs of our customers”, he said.
It represents a “a significant step in the pursuit of our dual-fuel, all-island strategy”, he said.
In an interview with the Irish Examiner, Mr Mullins said after taking over as boss of the Cork-based state-owned group he determined the “dual fuel” strategy was the way to go.
“SWS was the number one objective” of the group to add to the Whitegate and other energy supply purchases the group has made.”
The current output by SWS of 179MW of energy is capable of supplying 70,000 homes, a catchment area equal to the size of Cork city.
When the wind energy business is fully developed over five years it will provide the group with 1,000MW of electricity and leave the group with “an absolute hedge against oil and gas prices in the years ahead”, Mr Mullins said.
“The acquisition significantly enhances the asset quality of our balance sheet and fulfils the commitment made when we went to international financial markets and raised over €800m.
“Over the next five years Bord Gáis will invest €700m in the construction of wind projects and in the process create 250 sustainable jobs,” he said.
Mullins also paid tribute to the SWS management who have done a top-class job to get the business to its current state of development.
At this point Mr Mullins is sitting on a business that is worth €4.5bn and that will have grown its customer base from 600,000 to a 1m client base driven by the major success of the electricity Big Switch campaign “has energised the management – no pun intended” to forge ahead with the SWS deal.
Ireland and Scotland have a terrific natural resource in wind. Mullins said it is a sound commercial proposition unlike other countries, like Germany, where they over-invested in wind energy.
“Ireland has not made that mistake and if properly managed could in time result in us exporting its excess energy, which would boost the country’s payment,” he said.
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