Portuguese energy giant GALP has announced today that it has ended negotiations with Moeve over a potential merger of their refining and fuel marketing businesses after failing to reach an agreement.
In a statement, the Portuguese oil company explained that, following the non-binding agreement announced on January 8 with Moeve’s shareholders, Mubadala Investment Company and the Carlyle Group, the parties held in-depth negotiations but were unable to reach an understanding finalising the transaction.
GALP also said that the end of negotiations will have no impact on its current operations “nor on the company’s confidence in the potential for autonomous value creation within its downstream portfolio”, namely the refining and marketing businesses, while maintaining its commitment to the transformation of its industrial and commercial activities and remaining open to future opportunities for consolidation within the sector.
GALP’s chair, Paula Amorim, quoted in the statement, regretted the lack of agreement between the parties, noting that the deal represented an opportunity to create a major European refining and marketing operator.
“Although the strategic rationale underlying the proposed transaction continues to make sense, the parties were unable to reach the commercial alignment necessary to establish a lasting partnership that would generate long-term value,” she said, as quoted in the statement.
Nevertheless, she highlighted GALP’s financial position and the growth prospects for its oil and gas exploration and production activities, assuring that the company will continue to prioritise investments that create long-term value.
“Discipline in capital allocation and the creation of long-term value will continue to guide our decisions,” Amorim emphasised, adding that the company continues to believe in the benefits of consolidating its refining and marketing businesses and pursuing strategic partnerships.
In July, GALP’s co-CEO, Maria João Carioca, told Lusa that the negotiations could conclude in the fourth quarter of this year, although the company intended to finalise the deal as soon as possible, citing the operation’s scale and complexity as the reason for the delay.
The project involved combining the two companies’ refining, petrochemicals and fuel marketing businesses in the Iberian Peninsula, including GALP’s refinery in Sines and Moeve’s plants in Huelva and Cádiz.
The deal raised concerns on the part of the Portuguese government, with minister for the environment and energy, Maria da Graça Carvalho, stating in early July that the government was examining legal measures to ensure that the Sines refinery remains in Portugal and guarantees priority supply to the country in times of crisis.
Moeve (formerly Cepsa) is owned by Mubadala Investment Company, the sovereign wealth fund of the United Arab Emirates, and the United States-based Carlyle Group.
Despite the breakdown of negotiations, GALP reiterates its confidence in its refining and marketing businesses, highlighting its network of petrol stations in Portugal and its energy transition projects in Sines, including the production of green hydrogen and advanced biofuels.
The company also confirms that its investment priorities remain unchanged and that it will continue to seek “opportunities to create additional value through investment models that make more efficient use of capital.”
Source: LUSA