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Eni (E) to Divest $1.52B Stake to Help Reduce Italy's Debt

Eni SpA E is seeing a €1.4-billion ($1.52 billion) stake sold by Italy as part of the nation’s broader strategy to reduce its substantial debt, per a Bloomberg report.

The sale involves 2.8% of Eni’s shares and is being conducted through an accelerated book building process.

Under the leadership of prime minister Giorgia Meloni, the Italian government has embarked on an ambitious plan to divest around €20 billion worth of state-held assets by 2026.

The extensive privatization strategy includes stakes in other major Italian entities, such as Banca Monte dei Paschi di Siena SpA and Poste Italiane SpA. The proceeds from these disposals are earmarked for cutting down the country’s debt, which stood at a daunting 137% of GDP at the end of 2023.

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After this round of sales, the Italian Treasury will retain roughly a 2% share in Eni. Meanwhile, Cassa Depositi e Prestiti, a state-controlled lender, will maintain about 28% of the company. The latest move to sell shares is significant, considering that Italy is offering 92 million shares priced at €14.855 each, representing a 1.7% discount to Eni’s closing price on the day before the announcement.

Eni, one of Europe’s largest oil companies, has a current market capitalization of about €49 billion. The company has been actively diversifying its operations, and increased its footprint in natural gas production and renewable energy sectors, aligning with global energy transition trends.

As part of its strategic reorganization, Eni plans to spin off its biochemical division, Novamont, and establish a dedicated unit for carbon capture activities. Additionally, there are plans to list its refining and fuel segment, Enilive, which marks a significant shift in its business model toward more sustainable energy practices.

The strategic divestment and reorganization underline Italy and Eni’s dual commitment to financial prudence and sustainable energy innovation, setting a notable precedent in the national and global energy markets.

Zacks Rank & Other Key Picks

E currently has a Zack Rank #2 (Buy).

Investors interested in the energy sector may look at some other top-ranked stocks like SM Energy Company SM, Ecopetrol S.A. EC and Hess Corporation HES. SM Energy and Ecopetrol sport a Zacks Rank #1 (Strong Buy), and Hess carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

SM Energy is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition, and production of oil and gas in North America.

The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $6.60 and $7.46, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

Ecopetrol operates across various sections of the oil and gas industry, including the exploration, development, and production of oil and gas, refining, transportation, and the sale of petroleum products.

Ecopetrol has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days. The Zacks Consensus Estimate for EC’s 2024 and 2025 EPS is pegged at $2.55 and $2.63, respectively.

Hess is a leading oil and natural gas exploration and production company. The company’s oil and gas proved reserves increased year over year last year by more than 8%.

The Zacks Consensus Estimate for HES’s 2024 and 2025 EPS is pegged at $9.17 and $11.15, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

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Hess Corporation (HES) : Free Stock Analysis Report

Eni SpA (E) : Free Stock Analysis Report

SM Energy Company (SM) : Free Stock Analysis Report

Ecopetrol S.A. (EC) : Free Stock Analysis Report

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