28 Business combinations

Business combination of Atel and EOS

In December 2008, the Boards of Directors of Atel Holding, EOS Holding and EDF International approved the industrial combination of the operations of Atel and EOS, together with the transfer of the energy purchase rights and obligations associated with EDF's 50 % interest in Emosson SA. The contracts for this deal were signed by all parties after market closing on 18 December 2008.

The Extraordinary General Meeting of former Atel Holding Ltd held on 27 January 2009 approved all proposals related to the merger.

At its constituent meeting on 27 January 2009, the Board of Directors of Alpiq Holding Ltd. decided to increase the share capital of Alpiq Holding Ltd. by a total of 5,666,241 fully paid registered shares of CHF 10 each from CHF 218,379,180 to CHF 275,041,590. This capital was issued out of the authorised capital increase approved by the Extraordinary General Meeting on 7 November 2007 for purposes such as this.

As consideration for the transfer of its assets, EOS Holding received a total of 4,478,730 fully paid registered shares of CHF 10 each in Alpiq Holding Ltd. In addition, Alpiq made a payment of CHF 1,784.5 million, funded through a CHF 1,000million short-term acquisition financing facility and shareholder loans. A portion was paid from existing cash resources. At 30 June 2009, CHF 700 million of the short-term acquisition financing facility was already refinanced over the long term by bond issues.

The assets transferred by EOS comprised the following interests:

100.0 % of Energie Ouest Suisse (EOS) SA, Lausanne, incl. its subsidiaries and investments

100.0 % of Avenis SA, Lausanne

100.0 % of EOS Trading SA, Lausanne

31.8 % of Cleuson-Dixence Construction SA, Sion

27.6 % of Hydro Exploitation SA, Sion

20.0 % of Cisel Informatique SA, Matran

For transferring its Emosson assets, EDF Alpes Investissements Sàrl (EDFAI) received a total of 1,187,511 fully paid registered shares of CHF 10 each in Alpiq Holding Ltd. By acquiring the additional 50 % of the electricity purchase rights in the Emosson power station, Alpiq gained control of the company. Alpiq therefore performed a purchase price allocation in accordance with IFRS 3 and fully consolidated the power station from the date of acquisition. As required by IFRS, the previously held 50 % interest was remeasured to fair value. The difference between the previous share of net assets and fair value was recognised directly in equity.

Based on the valuation of the EOS and Emosson assets and liabilities transferred, which was carried out in the first half of 2009, the assets shown below were determined and allocated to assets and liabilities.

    EOS operations transferred   Emosson operations transferred
CHF million IFRS carrying amount Fair value IFRS carrying amount Fair value
Property, plant and equipment 496 1,268 419 1,380
Intangible assets 443 1,601    
Investments in associates and other financial investments 873 3,569    
Cash and cash equivalents 252 252 5 5
Other current assets 447 447 6 6
Provisions and deferred income tax – 202 – 1,054   – 211
Financial liabilities – 709 – 709 – 262 – 262
Other liabilities – 372 – 1,126 – 28 – 28
Minority interests – 3 – 61    
Net assets 1,225 4,187 140 890
Alpiq Holding's previous 50 % interest in Emosson       – 445
Net assets, excl. Alpiq Holding's previous interest   4,187   445
Goodwill arising on acquisition   149   231
Consideration settled by issue of Alpiq Holding registered shares   – 2,545   – 675
Net cash flow on acquisition:        
Net cash acquired with the subsidiaries   252   5
Transaction costs   – 7   – 1
Cash paid   – 1,784    
Deferred consideration liabilities (retained guarantees, shareholder loans)   1,070    
Net cash flow   – 469   4
         

Goodwill consists mainly of assets that are not separately identifiable and the synergies expected to arise from the combination.

Due to the small market size, the quoted market price at the date of exchange was not a reliable indicator of the fair value of the shares issued by Alpiq Holding Ltd. For this reason, a current business valuation was performed in the first half of 2009 using the same valuation model as that applied to determine the exchange ratio between the parties involved.

From the date of integration into the Alpiq Group, the acquired companies contributed CHF 2,803million to revenue and CHF64 million to the net profit of the Group.

If the businesses had been acquired on 1 January 2009, consolidated revenue would have been CHF269 million higher and the Group's net profit would have been CHF24 million higher. Had the companies been included in the 2008 financial year, revenue would have increased by CHF3,486 million and the Group's net profit by CHF162 million.

Other business combinations

In 2009, the following companies were acquired and included in the consolidated financial statements: