By Isla Binnie
MADRID (Reuters) -Naturgy defended a plan to split into two listed businesses on Friday, promising the new structure would allow both companies to grow after a share price plunge indicated investor scepticism.
The Spanish gas and power group said on Thursday it would separate its infrastructure and energy businesses, while maintaining the same shareholder structure and workforce.
Shares rose after the announcement, but plunged in early trading on Friday and were down 9.7% around midday.
The sell-off shaved about 2.7 billion euros ($3.1 billion) off Naturgy’s market value, leaving it worth just under 25 billion euros, according to Reuters calculations based on Refinitiv data.
Responding to questions about the plan from analysts on a conference call, Chief Executive Francisco Reynes said that having two companies would allow them to “become more competitive in pursuing new projects of growth in the future.”
JP Morgan analysts wrote that the split was expected to bring higher corporate costs and potentially a funding gap in the liberalised energy business.
But Reynes said that “the cost of missing synergies by the organisation we have in mind is absolutely negligible.”
Steven Fernandez, Naturgy’s global head of capital markets, said Naturgy would maintain its “opportunistic” approach to mergers and acquisitions.
Naturgy’s shareholders include private equity firms CVC and GIP and Criteria Caixa, the investment holding company which is the main shareholder of Caixabank. Last year, Australian fund IFM bought a 12% stake.
Most of its 13 billion euro debt would stay with the Spanish infrastructure business, Fernandez said.
($1 = 0.8768 euros)
(Reporting by Isla Binnie; Additional reporting by Jesus Aguado; Editing by Edmund Blair)
