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French Group Total Move in on Lithium Market as Industry Flourishes

French Group Total Move in on Lithium Market as Industry Flourishes

The executive board of Saft, a world leader in high technology batteries, has advised investors to tender shares after they agreed to a passive takeover by French oil and gas company Total for around $1bn. The deal will give shareholders a huge return on initial holdings considering the growth of the Lithium battery specialists over the past year.

Hong Kong, May 31, 2016 — “With this acquisition, Total will help Saft to become the company’s trailblazer in the sector,” said Total CEO Patrick Pouyanné, in a press release. “It has given us significant exposure with regard to the electricity storage field.”

Saft mainly produces nickel and lithium-ion batteries, used in transport, military and civil electronics markets.

Total Pledges on Energy
Total has promised to spend half a billion dollars per year on renewable energy and this is not the first time the group has made waves in the sector. Five years ago they bought controlling stock in an American solar panel producer, SunPower.

“Although this is not out of character for Total, it might surprise some investors who will question whether the buyout will bring any middle term profits for the company,” Marc Kofler, Jeffries International financial expert told the magazine.

Conversely, Gary Chambers, Chief Investment Officer and Director of Corporate Trading at Fidea Wealth Management, sees this move as another step in the right direction. “The key for big oil companies in this day and age is diversification. The renewable energy market is developing economically. Oil, on the other hand, continues to slide and be vulnerable to political changes” he said in statement to clients. “Tech costs continue to tumble and although oil prices have made a moderate recovery it doesn’t offset this” he added. “We may see more oil giants follow suit”

What are the ramifications for investors?
The Lithium battery sector is certainly on the rise and Total’s takeover of Saft demonstrates that this demand extends well outside the electric vehicle sector, although firms in that area such as Tesla Motors are, of course, making strides into the market.

Certainly, the significance of energy storage is an area that renewable energy speculators have been aware of for years. But when one of the largest oil and gas organizations on the planet stakes considerable money on developing its exposure in the sector, the shift away from fossil fuels towards renewables looks ever more realistic.

Kazuko Rei
Fidea Wealth Management
Tokyo, Japan

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