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Investing.com -- TotalEnergies’ €5.1 billion all-share deal to buy half of EPH’s 14-gigawatt gas-to-power portfolio prompted the company to cut its long-term capital-spending plan and move up its forecast for positive free cash flow in its power business.
The agreement gives the French energy company 50% of Energetický a průmyslový holding, a.s., a portfolio valued at 7.6 times 2026 EBITDA.
The transaction will be executed through 95.4 million shares priced at €53.94 each, representing 4.1% of TotalEnergies stock and a 4% discount to the prior Friday close.
The EPH assets span more than 14 GW of flexible power capacity across Italy, the United Kingdom, Ireland, the Netherlands and France, including 11 GW in operation and about 3 GW under construction
The portfolio consists of gas-fired plants and batteries. TotalEnergies’ in a statement said “this will position the Company as a key player to meet Europe’s growing data center demand” and noted the company’s statement that the transaction builds on its LNG supply position “particularly between the United States and Europe...to capture added value to approximately 2 Mtpa of LNG.”
The Integrated Power segment is now expected to generate positive free cash flow in 2027, one year earlier than previously indicated. The company also lowered its annual net capital expenditure outlook by $1 billion to $14 billion to $16 billion for 2026 through 2030.
Over the next five years, TotalEnergies expects about $750 million a year in additional available cash flow, which Jefferies noted “far exceeds the additional dividend requirement for the newly issued shares.”
According to the brokerage, Integrated Power currently accounts for about 7% of TotalEnergies’ estimated 2025 cash flow from operations.
Jefferies calculated that covering the dividend for the 4.1% share issuance would require roughly $350 million annually, compared with the company’s guidance for an added $750 million in yearly cash flow. TotalEnergies trades at 5 times EV/EBITDA, Jefferies said.
Jefferies characterized the transaction as a “small +ve,” pointing to the portfolio’s flexible generation assets and the company’s view that the acquisition is “immediately accretive to cash flow per share,” with the potential to advance positive free-cash-flow timing and reduce long-term capital-spending requirements.