Eni Shares on Thursday, (ENI.MI) experienced a decline amidst renewed speculation that Italy’s Treasury might consider reducing its stake in the energy group. Traders reacted to reports suggesting a potential sale of up to 4% of Eni by the Treasury, raising concerns about the government’s intentions to leverage the stake sale for debt reduction.
I. Government’s Significant Stake in Eni
Currently, the government holds approximately 32.4% of Eni, with a notable portion held indirectly through state lender Cassa Depositi e Prestiti (CDP). The Treasury’s direct stake stands at 4.7%, contributing to its substantial influence over the energy company.
II. Share Price Response
Following reports from Bloomberg News on the Treasury’s contemplation of a stake sale post the completion of Eni’s share buyback, Eni’s shares saw a dip of 0.8% at 1545 GMT. The energy group opted not to comment on the speculations, leaving investors to assess the potential implications.
III. Share Buyback and Investor Rewards
Eni initiated a share buyback program last year, intending to purchase and cancel a total of 275 million shares. With the goal of completing the buyback even before the end-of-April deadline, the move aims to reward investors. The cancellation of shares is expected to elevate the government’s total stake in Eni to over 34% of voting shares, providing flexibility for a strategic reduction in total shareholding without relinquishing control over the company.
IV. Strategic Considerations
Italy’s Economy Minister Giancarlo Giorgetti expressed support for reducing the Treasury’s stake in Eni following the completion of the share buyback scheme, deeming it a favorable idea. The speculated sale of a 4% stake at current prices could potentially raise 2 billion euros ($2.17 billion)
contributing to the reduction of public debt.
V. Banking Interest in Stake Sale
In addition to the speculative reports, Reuters noted that several investment banks approached the Treasury with offers to assist in selling part of its stake in Eni. This external interest adds another layer of complexity to the situation, with potential financial institutions exploring opportunities in the energy company’s stake sale.
In conclusion, Eni’s shares faced a downturn amid renewed speculation about the Treasury’s consideration of reducing its stake. As the government explores options for leveraging the stake sale for debt reduction
investors are closely monitoring developments, cognizant of the potential impact on Eni’s market dynamics.