Portuguese energy firm Galp and private equity-backed Moeve (formerly CEPSA) are in talks to combine their refining, chemicals and fuel retail businesses, they said on Thursday. If successful, the deal would create one of Europe's biggest refiners.
Under their non-binding agreement, Galp and Spain's Moeve plan to create two new companies. Moeve's shareholders are the United Arab Emirates' state-owned investment company Mubadala and US investment firm Carlyle Group.
One new company would run 3,500 retail fuel stations mainly in Spain and Portugal, selling more than 6.5 million tonnes of refined products annually. Ownership of this unit would be split equally between the two firms.
The other would operate Moeve's Huelva and Algeciras oil refineries and Galp's Sines refinery. The three facilities have combined capacity of around 700,000 barrels per day.
Moeve would be the majority owner in the unit, with Galp set to own a minority stake above 20 per cent. Galp's upstream oil and gas production business would not be included in any merger.
This business includes stakes in much-watched, undeveloped oil fields offshore Namibia. "We expect the key takeaway from the market is that this may increase the likelihood of Galp as a take-out candidate given the cleaner portfolio," said RBC analyst Biraj Borkhataria.
Galp's share price was up 1.4 per cent at 09:21 GMT, outperforming a broader index of European energy firms, which was down 1.4 per cent.
(Additional reporting by Stephanie Kelly; Editing by Joe Bavier)
