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Shell (RDS.A) Eyes Eneco Buyout to Boost Renewables Business

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In a bid to bolster renewable energy business, Royal Dutch Shell plc is contemplating the acquisition of sustainable energy provider Eneco. Notably, the Anglo-Dutch giant has teamed up with pension fund manager PGGM to place a joint bid for the Eneco buyout.

The move comes after the government-held Eneco announced its decision last month to be privatized via an auction. Eneco, which is valued by analysts at around $3.4 billion, is heavily invested in green energy projects and complements Shell’s New Energies division quite well.

The move is in sync with Shell’s intention to ramp up its renewable foothold. In fact, the company will invest up to $2 billion per year till 2020 in its New Energies division, which will also serve as a hedge for reduced gasoline and diesel fuel demand. The Zacks Rank #5 (Strong Sell) company believes that pumping money into the New Energies unit is likely to significantly increase its customer base and drive revenues. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In fact, Shell has been on an acquisition spree of late, having collaborated with IONITY, New Motion, First Utility, Silicon Ranch and Cleantech Solar, as it attempts to diversify its portfolio beyond oil and gas. With renewable energy becoming affordable, the oil conglomerate sees immense potential in developing projects like hydrogen fuel-cells, alternative energies, liquefied natural gas and next-generation biofuels. Shell’s New Energies division has also made investments in U.S. thermal storage specialist Axiom Energy, microgrids and distributed energy services player GI Energy, hydrogen compression specialist HyET, as well as German home storage developer Sonnen.

In fact, amid climate change concerns, other big oil companies like TOTAL SA , Equinor ASA (EQNR - Free Report) , BP plc (BP - Free Report) , Exxon Mobil Corporation and Chevron Corporation have also started reorienting their strategies to de-carbonize the energy system via increasingly shifting to alternative fuels.

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