It has become less likely that Germany and the Netherlands will reach a deal over the sale of electric grid firm TenneT's (IPO-TTH.AS) German operations before a Dutch election next month, three people familiar with the matter said.
The two countries have been working hard towards a sale of TenneT Germany, with an enterprise value of up to 25 billion euros ($26.3 billion), since February, but valuation continues to be a sticking point, they said.
The German government is not ready to make a decision, two sources said, while financial negotiators have reached an impasse after a push to get the deal done before Dutch parliament goes into recess on Oct. 27.
The two parties are around 1.5 billion euros apart in how they value TenneT's German division, one of the sources said, adding the unit had net debt of around 14 billion euros and a regulated asset base of 18 billion.
The Dutch side is unwilling to compromise on TenneT's valuation that has been calculated by its financial advisers, the people said.
Meanwhile Berlin is divided over whether to accept a price that would result in it taking a highly visible loss when it refinances TenneT Germany by selling a minority stake in the medium term, as it plans to do after it has taken control, the people said.
Spokespeople for TenneT, the Dutch Finance Ministry and Germany's Economy Ministry all said talks were ongoing, without elaborating.
Berlin wants control over TenneT's German operations given the crucial role the grid will play as renewable electricity production increases. Meanwhile The Hague is willing to sell -- in part due to TenneT's immense capital needs.
TenneT plans to invest more than $100 billion in infrastructure in the coming decade, most of it in Germany and the North Sea.
The Dutch government has said it is willing to sell TenneT Germany for a market-based price but parliament must sign off on any offer before the deal can proceed and it is set to adjourn this month ahead of the Nov. 22 election.
($1 = 0.9490 euros)
