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French Oil Major Buys into Batteries for $1.1B

Energy Storage

Seeking to expand its electricity and renewable energy business, French energy giant Total SA has agreed to acquire high-tech battery maker Saft for $1.1 billion in the oil supermajor’s largest investing in renewable energy in over five years.

Total offered to pay US$41.62 per share, which—according to the French energy company—represents a 38.3 percent premium to Saft’s closing share price on May 6.

Saft’s supervisory board has unanimously approved the friendly takeover bid.

French-based Saft designs and manufactures batteries for the industrial, transportation and civil and military electronics markets. The deal is intended to turn Saft into Total’s “spearhead in electricity storage”, according to Bloomberg.

Related: A Glimpse Into What Saudi Arabia’s New Oil Policy Will Look Like

With crumbling oil prices, Total is seeking to increase its foothold in the renewable energy sector, with the next two decades set to bring increasing investment, particularly in the solar power segment. Overall, Total is looking to invest US$500 million annually in renewable energy.

In 2011—it’s last major renewable energy investment--Total purchased a controlling stake in U.S.-based SunPower Corp. for $1.38 billion.

In the oil patch, however, Total is hoping to divest some $10 billion in assets and make further spending cuts. Already, capex is down to $19 billion in 2016 from $23 billion in 2015.

In April, Moody’s Investors Service downgraded the Total’s credit ratings by two notches from Aa1 to Aa3 with a stable outlook.

Related: Saudi Arabia To List Aramco Shares In New York, London, Hong Kong

Moody’s says Total could have “moderate negative cash flow” over the next few years, which means it will not be able to significantly reduce debt.

Total’s net profit for the first quarter of this year fell 40 percent to $1.61 billion, down from $2.66 billion for the same period last year, but still above analyst expectations of $1.14 billion. But production hit a 10-year record at 2.48 million boe/day in the first quarter.

By Charles Kennedy of Oilprice.com

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  • GregSS on May 10 2016 said:
    Lee: BP adopted the "Beyond Petroleum" moniker, but appears to be backtracking on that since the big spill.
  • Lee James on May 09 2016 said:
    Total is showing signs of transitioning away from burning carbon -- first with PV investment in Qatar, and now with electric battery storage.

    Any other major oil companies showing signs of reconsidering business and the future of energy (away from burning hydrocarbons)?
  • GregSS on May 09 2016 said:
    The conspiracy theory guys will go nuts on this one, saying that the oil companies are buying up green technology companies with the intention of killing them, like they did with the "100MPG carburetor"

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