RWE to create greener utility via major asset swap deal with E.on

Image by RWE AG (http://www.rwe.com).

The story has been updated. Go to RWE, E.on deal to close by end 2019.

March 12 (Renewables Now) - German energy company RWE AG (ETR:RWE) on Sunday said it would sell its majority stake in Innogy SE (ETR:IGY) to sector player E.on SE (ETR:EOAN), but it will get the renewables businesses of both firms to create “a leading European utility for renewables and security of supply”.

An agreement in principle has been reached for the sale of RWE’s 76.8% stake in Innogy. The complex transaction will include a wide-ranging exchange of business activities and participations and a EUR-1.5-billion (USD 1.85bn) cash payment from RWE to E.on.

The parties are yet to conclude binding agreements and to get board approvals.

Through the deal RWE would secure a 16.67% stake in E.on. The latter would issue the shares via a 20% capital increase against contribution in kind under the existing authorisations. RWE would also acquire “substantially all of” E.on’s renewables operations, including the economic benefits as of the start of this year, and it would keep Innogy’s renewables and gas storage businesses, and the latter’s interest in Austrian utility Kelag. In addition, RWE would get the minority stakes held at present by E.on subsidiary PreussenElektra in the RWE-operated nuclear power plants Gundremmingen and Emsland.

RWE said its plan is to combine the renewables businesses of Innogy and E.on to establish a greener utility with a broadly diversified portfolio of renewable and conventional power generation assets, which would be linked via its existing trading business.

The price for the company’s stake in Innogy would be EUR 40 per share, including EUR 3.24 of dividends for 2017 and 2018, which RWE would still receive until the transaction is closed.

Innogy listed in 2016 as the renewables, grids and retail operations unit of RWE. Today it reported 2017 results, saying its adjusted net profit grew by 9% to more than EUR 1.22 billion. The company, which has a large onshore and offshore wind portfolio, expects an adjusted net income of over EUR 1.1 billion in 2018.

E.on is to make a voluntary public takeover offer in cash to Innogy’s minority shareholders at up to EUR 40.00 per share. This price will again include EUR 3.24 in dividends. If the acquisition is completed before Innogy’s annual general meeting which resolves on the 2018 dividend, E.on’s offer would be raised accordingly so as to meet the total value.

As usual, the deal will need antitrust and regulatory approvals.

At the end of 2017, Innogy had 3,486 MW of renewables capacity, including 2,013 MW of onshore wind and 925 MW of offshore wind. It also had 582 MW of onshore and offshore wind projects in construction.

(EUR 1 = USD 1.23)

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