PRAGUE, April 23 (Reuters) - Czech power utility CEZ is preparing to spin off non-production assets such as electricity, gas distribution and trading, and sell up to 49% of the unit to investors, news
CEZ may divest non-production assets in first step of overhaul
CEZ's Strategic Asset Divestment and Government Control Plans
By Jan Lopatka
Overview of the Planned Divestment
PRAGUE, April 23 (Reuters) - Czech power utility CEZ is preparing to spin off its non-production assets and sell up to 49% of the new unit to investors, a move that could help fund the government's goal to take full control of the company's power generation business.
The planned carve-out would include electricity and gas distribution, customer sales and trading, CEZ said on Thursday.
The transaction would offer investors regulated assets with predictable returns while generating cash for investment in gas-fired power plants as CEZ phases out coal.
Government Buyout and Ownership Goals
It could also raise funds for a government plan to buy out minority shareholders and take full ownership of CEZ, using the company's own financial resources. The Czech state owns about 70% of the utility and wants tighter control of a key asset.
"The separation of stable, regulated, and customer-centric activities from generation activities exposed to a higher market volatility and different investment risks may enable (the subsidiary) to attract a broader range of financing banks and investors," CEZ said.
Potential Sale Methods and Investor Appeal
The sale of a stake in the subsidiary, or in individual units, could be carried out through an initial public offering or a direct sale, it added.
CEZ said the assets could appeal to investors focused on lower-risk, regulated businesses such as infrastructure and pension funds, which may avoid CEZ because of its nuclear and coal exposure.
The plan will be discussed at CEZ's June 1 annual meeting. The government had no immediate comment.
CEZ shares were up 0.9% at 1,201 crowns at 1254 GMT, reducing losses in the wider Prague market. The company has a market capitalisation of about $31 billion.
Spinoff Covers Major Assets
SPINOFF COVERS MAJOR ASSETS
The new unit would include distribution of electricity and gas, sales to final customers, trading, smart energy and telecommunication services, CEZ said.
Distribution and sales contributed 53 billion crowns ($2.5 billion), or 38% of 2025 group earnings before interest, taxes, depreciation and amortisation (EBITDA) of 137 billion crowns.
Market Perspective and Challenges
State-regulated assets have predictable returns and typically trade at higher multiples, said Komercni Banka analyst Bohumil Trampota.
But he said the plan for full state control could face obstacles, including opposition from minority shareholders, who may hold enough to block a squeeze-out that would only be possible once the state reaches a 90% stake.
Details on Generation Business
The generation business that the government wants to fully control would include CEZ's nuclear, coal, gas and renewable plants, lignite mines and a minority stake in a unit building a new nuclear power station.
($1 = 20.8410 Czech crowns)
(Reporting by Jan Lopatka. Additional reporting by Alicja Surdy in Gdansk. Editing by Mark Potter)
