Snam, the Milan-based natural gas pipeline operator, will look to strengthen its hand in hydrogen production technologies with the acquisition of a stake in equipment supplier Industrie De Nora SpA.
Snam signed a deal to buy a 33% share in De Nora from Blackstone Tactical Opportunities, according to a statement from the company. The purchase, set to close in 2021, is based on De Nora having a 1.2 billion euro enterprise value, the statement said without giving further details.
The De Nora acquisition follows Snam’s earlier agreement to buy 33 million euros of shares in British ITM Power Plc. as part of its foray into green hydrogen development.
De Nora manufactures electrodes for electrochemical industrial applications, which are used in manufacturing green hydrogen as well as water treatment. This technology is key to the development of the clean burning fuel. Snam is particularly interested in the latest generation of electrodes, which can improve the performance and economics of hydrogen using the alkaline water electrolysis process.
The deal comes as Italy outlines its investment strategy for increased hydrogen usage in an effort to become carbon neutral. The Southern European nation is looking to attract around 10 billion euros of investment in the sector over the next ten years, according to a draft of the strategy document seen by Reuters. It sees half of that amount coming from European funds and private investments. The aim would be to introduce 5 gigawatts of electrolysis capacity necessary to separate the gas from water, according to Reuters. The draft document will be the basis for discussion as Italy moves towards a final approval.
Snam will be able to appoint three members to the De Nora board of directors, participate in technical and strategic committees and be able to second staff to the company. Snam sees De Nora as ideally positioned to become an international, technology-based listed company in the medium term, and representing a potential seed asset for a new investment platform on energy transition, according to the release.
Currently De Nora generates revenues of over 500 million euros a year, and expects an Ebitda of 90 million euros in 2020, according to the statement.
The acquisition shows that bigger players servicing large markets are preparing for a transition to clean energy. They are seeking to position themselves in this future market via purchase and partnership with technology businesses which will be key to delivering the necessary know-how.