Dec 1, 2014 - German utility E.on SE (ETR:EOAN) said yesterday it will spin off its conventional upstream and midstream activities in a bid to focus on renewables, distribution networks and customer solutions.
The company wants to concentrate specifically on growing its wind power business in Europe and other selected target markets and, in the meantime, it will also beef up its solar activities. In addition, E.on intends to upgrade its energy distribution networks in Europe and Turkey in a way that would enable the introduction of new products and services in energy efficiency and distributed generation.
To implement this plan, the company will increase the investment sum planned for next year by some EUR 500 million (USD 622m) to around EUR 4.8 billion. E.on explained in a statement that the three core businesses it would focus on “fit together and reinforce each other”. The restructured company will employ approximately 40,000 people.
E.on will start preparations next year to separate its conventional generation, global energy trading and oil and gas exploration and production businesses into a new, independent company. The group’s existing shareholders will hold a combined majority stake in the new entity, while E.on itself will have a minority interest with plans to sell it over the medium term. It will also seek a listing for the separated operations in 2016. “The transformation of the energy system will continue to require reliable backup capacity well into the future as well as access to global markets for energy products,” CEO Johannes Teyssen commented.
Meanwhile, Australian investor Macquarie Group Ltd (ASX:MQG) is acquiring E.on’s entire business in Spain and Portugal, renewables included, for an enterprise value of EUR 2.5 billion. Also, E.on said it is considering a sale of its operations in Italy and will review the strategic alternatives for its exploration and production business in the North Sea.
E.on added that it expects to post a substantial net loss for the full 2014 as it expects impairment charges of some EUR 4.5 billion, primarily on its activities in Southern Europe and on generation assets. This is in addition to the roughly EUR 700 million in such charges disclosed in the first nine months of the year, the company noted.
(EUR 1.0 = USD 1.245)
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