* Gas Natural to take exit decision in March - sources
* Assets worth around 700 mln euros - sources
* 2i Rete Gas, Italgas interested - sources
By Stephen Jewkes and Pamela Barbaglia
MILAN/LONDON, Feb 6 Gas Natural has
hired Rothschild to carry out a strategic review of its Italian
business which could result in the Spanish energy company
selling its assets in the country for as much as 700 million
euro ($751 million), sources said.
A board meeting will be held in March to decide whether to
take advantage of growing appetite for Italian gas distribution
assets after a recent reform of the sector, one of the sources
Gas Natural declined to comment, while Rothschild was not
immediately available for comment on the planned review.
However, another source close to the Spanish group said it
was assessing its strategic options in Italy and had taken no
The company, which has been in Italy since 2002, runs more
than 7,000 km of regulated gas distribution pipelines, mainly in
the south, alongside a retail business that sells gas and power
to over 420,000 families and 17,000 companies.
But Gas Natural's Italian business generates just 1.3
percent of its core earnings. And in the third-quarter, core
earnings in Italy for distribution fell 12 percent to 15 million
Italy's gas distribution industry is highly fragmented with
more than 200 companies working across almost 7,000 concession
areas serving more than 20 million clients. But new rules
cutting concession areas to just 177 are set to streamline the
industry to make it more efficient and cut bills.
A handful of industry players including 2i Rete Gas and
Italgas have already flagged an interest in Gas
Natural's business, two sources said, with one adding that the
grid assets could fetch 500 to 550 million euros if sold on
Gas Natural's grid business in Italy is of particular
interest to investors due to the regulated nature of its income
flows and its growth opportunities.
Italy's second-biggest gas distributor 2i Rete Gas could
team up with EDF unit Edison to buy the whole package,
another source said. Alternatively, Italgas, the third biggest
gas distributor in Europe, could make an offer for the grid.
This would fit with its plans to increase its market share
in Italy to about 40 percent from 34 percent.
Italgas and infrastructure fund F2i, which controls 2i Rete
Gas, declined to comment on any possible bid.
In November, Italgas CEO Paolo Gallo told Reuters that
Italgas could consider buying smaller gas distributors across
Italy to boost growth.
($1 = 0.9319 euros)
(Additional reporting by Jose Elias Rodriguez; Editing by