Transgas sale to RWE gets Czech approval

The Czech anti-monopoly watchdog approved the takeover of Transgas by Germany's RWE Gas yesterday, removing the last obstacle to the completion of the largest Czech privatisation to date.

Spokesman Kristian Chalupa told Reuters the Office for Protection of Competition approved the deal under several conditions.

"The Office for Protection of Competition approved the merger with three conditions," Chalupa said. "The office mainly evaluated the impact of this merger on competition and the final consumer."

RWE has agreed to pay 4.1 billion euros ($3.71 billion) for a 97 per cent stake in Transgas and stakes in the country's eight regional gas distributors in a deal which makes RWE one of Europe's five largest gas firms.

The purchase gives RWE a part in one of the major transport link of Russian gas into western Europe and access to the growing market in the Czech Republic, an EU candidate country.

Transgas also imports gas for Czech consumption from Russia's Gazprom under a 15-year contract, and part of its needs from Norway, also under a long-term deal.

The Czech sale, agreed in December, was followed by neighbouring Slovakia's privatisation of its importer SPP to a consortium of Gaz de France, Gazprom and Ruhrgas, giving different sections of the same pipeline to competing companies.

Under the anti-monopoly conditions, RWE must not raise stakes held by the acquired companies in small Czech gas mining firm Moravske Naftove Doly.

It also must not buy stakes in electricity and heating companies or set up new ones before the sector is privatised.

Once the clearance becomes effective, which could be in two weeks, the Czech government can transfer its shares in the nine companies to RWE, which will pay the whole sum in one tranche.

The government has agreed not to convert the revenue into crowns on the foreign exchange market in order to prevent further firming of the already strong crown currency.

It has agreed with the central bank to leave as much as possible in foreign currency and convert the rest into the central bank's reserves.