Tue, Mar 13, 2018 - Page 10 News List

E.ON to buy RWE subsidiary Innogy


The logo of German energy company Innogy at its headquarters in Essen, Germany, is pictured on March 13 last year.

Photo: AFP

German energy giant E.ON SE plans to take over Innogy SE, the renewables subsidiary of competitor RWE AG, in a complex deal valued at about 20 billion euros (US$25 billion), both companies said on Sunday.

The in-principle agreement involving asset swaps is part of a major restructuring of Germany’s energy market, as Europe’s top economy switches from conventional to renewable power.

The aim is for E.ON to focus on the retail, energy networks and customer solutions business, while RWE would take over the renewables power generation of both companies.

RWE plans to sell its 76.8 percent stake in Innogy to E.ON in a deal that includes “a far-reaching exchange of assets and participations,” said E.ON, which also plans a cash offer to the remaining Innogy shareholders.

RWE would, in turn, gain an effective participation of 16.67 percent in E.ON.

E.ON would also transfer to RWE most of its renewables business and the minority interests held by its subsidiary PreussenElektra AG in two RWE-operated nuclear power plants.

RWE would receive the Innogy renewables and gas storage business and Innogy’s stakes in the Austrian energy supplier Kelag AG.

The deal, still subject to antitrust clearances, would also see RWE make a cash payment of 1.5 billion euros to E.ON.

Following approval by the two firms’ boards, the deal is expected to be signed shortly, E.ON said.

Business daily Handelsblatt said that “for decades E.ON and RWE were bitter rivals. Now they have agreed on a spectacular deal that will shake up the European energy market.”

Germany’s energy market has been rapidly transformed since Chancellor Angela Merkel announced a phase-out of nuclear power after Japan’s 2011 Fukushima Dai-ichi nuclear power plant meltdown.

Under the nation’s “energy transition,” Germany has raised the share of solar, wind and other renewables to about one-third of electricity production.

E.ON has spun off its fossil fuel operations and invested heavily in renewables, while RWE remains the biggest power producer and still operates major coal-fired plants.

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