EStAG and VERBUND are taking a step that points the way ahead in the consolidation of the domestic power industry - "STEWEAG-Steg GmbH" definite market leader in the Styrian power market - Bundling the hydroelectricity activities to bolster the leading position in Europe – Coordinated appearance in the market, cooperation in international business - Cooperation produces synergies of 500 million ATS per year and considerable rise in equity values.

Just in time, before the complete opening of the domestic power market, Energie Steiermark AG (EStAG) and VERBUND are taking a step that points the way ahead in the consolidation of the Austrian power industry. The amalgamation of the two largest Styrian power companies, STEWEAG and Steg, leads to a restructuring of the Styrian power industry. Moreover, EStAG and VERBUND will also closely cooperate in the Austrian market. "The merger of a Federal company and a Provincial company shows that solutions based on partnership are very well feasible in Austria to the benefit of the domestic economy", Hans Haider, Chairman of the VERBUND Board of Management, expressed his satisfaction with the cooperation.

Bundling: Further Strengthening Of Water Power In Europe

The cooperation aims at a series of important strategic goals. Thus bundling the water power activities of the two companies in VERBUND-Austrian Hydro Power AG (AHP) is another step toward strengthening this eco-friendly renewable energy. At production capacities of more than 5,700 MW and an annual output of approximately 21,600 GWh from a total of 80 hydroelectric power plants AHP will continue to improve its role as one of the major hydroelectric power producers of the EU. "Hence our cooperation is also a guarantor for securing domestic, environmentally friendly hydropower for Styria in the long term ", says Adolf Fehringer, Chairman of the EStAG Board of Management.

In a further step the thermal power production capacities of EStAG and VERBUND will be merged and bundled in VERBUND-Austrian Thermal Power AG (ATP), which will then dispose of a thermal total output of approximately 1,800 MW.

"STEWEAG-Steg GmbH" Offers Clean Power At Attractive Rates

The Styrian marketing and distribution activities of STEWEAG and STEG are merged into STEWEAG-Steg GmbH. Thus the amalgamation of the two largest Styrian electricity companies will further improve the market leader position. "STEWAG Neu will be able to offer a secure supply of clean electricity generated from hydropower and best services at attractive rates to a total of approximately 500,000 customers in Styria", Fehringer estimates the expectations concerning the Styrian market leader, which will operate under a new name relating to Styria.

Leadership Role In All Market Segments

The cooperation is not restricted to Styria, however. The goal of VERBUND and EStAG is to hold a top position in all customer segments in the open market by coordinating their domestic market performance and utilizing the joint marketing know-how. "We know that guaranteed supplies in combination with an environmentally sound production method - in addition to prices that are compatible with market conditions – are valued above all else especially by business customers but also by small private-sector customers. We have indeed much to offer in this respect ", Haider considers the starting conditions for a successful market performance to be very good.

Going To Croatia and Slovenia Together

Styria’s geographic position is a good starting point for working the markets in Southern and Southeastern Europe. For this reason EStAG and VERBUND will take a joint approach in the markets of Croatia and Slovenia. "Thus we can utilize the years of VERBUND know-how in the international power market, in which we are transacting approximately 50 percent of our power sales already today", Haider outlines another benefit of the new partnership.

Synergy Effects: 500 Million ATS Per Year

The synergy effects resulting from the cooperation between VERBUND and EStAG are substantial. Experts estimate that the synergy potential of the cooperation amounts to approximately 500 million ATS per year. The calculated cost of implementation is approximately 320 million ATS.

The cooperation will have an extremely positive effect on the equity values of the companies that are involved in the cooperation, STEWEAG-Steg GmbH, AHP, ATP and VERBUND: they will increase by 4.5 billion ATS in the aggregate. For STEWEAG-Steg GmbH alone this means a 15 percent increase in equity from 18.8 billion at present to 21.6 billion ATS. "This result could not nearly be reached in a stand-alone version ", is Fehringer’s extremely positive summary.