Extract from 'The Energy Mergers & Acquisitions Review'


In recent years the Portuguese M&A market has witnessed significant dynamism, with large-scale acquisitions being completed in the gas infrastructure (grids) and renewables generation sectors, including the following:

  1. in October 2016, Marubeni and Toho Gas acquired from Galp Gás a 22.5 per cent stake in its natural gas distribution business for €138 million;
  2. in June 2017, a subsidiary of China Three Gorges Group (ACE Portugal Sàrl) acquired 49 per cent of EDPR PT – Parques Eólicos, a 422 MW (megawatt) wind farm, for €248 million;
  3. in March 2017, Artá completed the acquisition of Gascan from Portuguese private equity fund Explorer for €70 million. In February 2019, Gascan was then sold by Artá to UBS Asset Management for €100 million;
  4. in October 2017, REN completed the acquisition of EDP Gás from EDP for €532 million;
  5. in May 2018, China Three Gorges launched a takeover offer for EDP and EDP Renováveis subject, in particular, to the withdrawal of the voting cap in EDP's articles of association by EDP's shareholders' general meeting. Since the withdrawal was not approved, in May 2019 the Portuguese Securities Market Commission (CMVM) put an end to the takeover offer based on non-compliance with the conditions established by China Three Gorges;
  6. in 2018, Aquila Capital acquired the entire share capital of EDP Small Hydro, SA, a company engaged in the operation of 21 mini hydro power plants, for €164 million;
  7. in March 2019, Total Eren acquired from Novaenergia Fund Novenergia Holding Company, which owns, in particular, Generg, one of the biggest renewable energy players in Portugal that is also active in six other European countries;
  8. in June 2019, Fundação Gulbenkian announced the sale of Partex Oil and Gas to Thai company PTTEP for €622 million; and
  9. in 2018 and 2019, Aquila Capital and BlackRock Investment (UK) acquired several greenfield ready-to-build solar projects in mainland Portugal.

Investor interest in the Portuguese renewables market, which may be evidenced through the transactions listed above, is aligned with the government's policy of fostering the development of, and an increase in, power generation capacity through renewable sources.

Pursuant to the Portuguese National Plan for Energy and Climate up to 2030 (PNEC 2030), the draft version of which was submitted to the European Commission in December 2018, the government is aiming to achieve the following targets for renewables generation in the energy consumption mix:

  1. 31 per cent by 2020;
  2. 33 to 34 per cent by 2022;
  3. 37 to 38 per cent by 2025;
  4. 40 to 41 per cent by 2027; and
  5. 47 per cent by 2030.

Simultaneously, according to the PNEC 2030, Portugal is aiming to achieve by 2030 a 52 per cent reduction in CO2 emissions when compared to the 2005 reference values.

To meet the above targets, a relevant increase in the number of new renewable generation facilities and repowering will most certainly be required, and will likely attract investment from foreign players and further fuel the positive energy M&A trend. EDP's publicised divestment plan and the projected sale of grid and hydro businesses shall also be followed closely.

Legal and regulatory framework

i Primary and secondary legislation

In Portugal, the general legal framework governing M&A transactions consists mainly of the following legislation:

  1. the Civil Code, enacted by Decree-Law 47344, of 25 November, as amended, which contains the general rules governing sales, purchases and contracts;
  2. the Commercial Companies Code, enacted by Decree-Law 262/86, of 2 September, as amended, which establishes the general framework governing Portuguese commercial companies and the legal regime governing share capital increases and decreases, mergers and demergers, as well as acquisitions and transfers of shares;
  3. the Securities Code, enacted by Decree-Law 486/99, of 13 November, as amended, which is applicable to listed companies but also contains the general regime relating to matters such as the transfer of shares in limited liability companies; and
  4. the Competition Act, enacted by Law 19/2012, of 8 May, as amended, which establishes the Portuguese competition legal regime.

On a specific basis, the legal framework applicable to M&A transactions in the energy sector comprises the following legislation:

  1. Law 19/2012, of 8 May, which governs the merger control regime from an antitrust perspective in relation to which the Portuguese Competition Authority (AdC) has exclusive jurisdiction to enforce the merger control rules;
  2. Decree-Law 29/2006, of 15 February, and Decree-Law 172/2006, of 23 August, as amended, which govern the electricity system and transpose the unbundling rules applicable to the electricity sector as set out in the Electricity Directive into Portuguese law;
  3. Decree-Law 31/2006, of 15 February, as amended, which governs the oil and gas systems and transposes the unbundling rules applicable to the electricity sector and set out in the Gas Directive 2009/73/EC into Portuguese law;
  4. Decree-Law 215-A/2012, of 8 October, sets out the restrictions applicable to the ownership of the national transmission network operator in the electricity sector; and
  5. Decree-Law 138/2014, of 15 September, which establishes the legal framework for the safeguarding of strategic assets deemed essential for national defence and security or for the supply of fundamental services in the energy, transport and telecommunications areas.

Additionally, the energy sector is further governed by specific laws and regulations, some of which are issued by the respective regulatory entities.

ii Merger clearance by the energy regulator

In general, in the energy sector, the regulatory entity that holds the authority to provide merger clearance is the AdC. Additionally, other regulatory entities such as the Regulatory Entity for Energy Services and the government may also play a role in the merger control review of energy assets if transactions involve entities subject to unbundling requisites or assets deemed to be strategic under the applicable legislation.

In addition, in the electricity sector, the transfer of licences to third parties in the context of a corporate reorganisation by merger, demerger or transfer of the management or operation of a renewables asset by a company is subject to prior authorisation from the DGEG.

Moreover, in the oil and gas field, the assignment of a concession's rights to a third party by the concession holder, as well as a change of control of concession holder, require a prior authorisation from the Ministry of Economy, which must be requested through the DGEG.