EON seeks takeover of RWE鈥檚 Innogy for US$25b
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German energy giant EON plans to take over Innogy, the renewables subsidiary of competitor RWE, in a complex deal valued at around 20 billion euros (US$25 billion), both companies said yesterday.
The in-principle agreement involving asset swaps is part of a major restructuring of Germany鈥檚 energy market as Europe鈥檚 top economy switches from conventional to renewable power.
The aim is for EON to focus on the retail, energy networks and customer solutions business, while RWE would take over the renewables power generation of both companies.
Chancellor Angela Merkel鈥檚 decision to phase out nuclear power after Japan鈥檚 Fukushima nuclear disaster of 2011, and her government鈥檚 focus on raising 鈥渃lean鈥 energy output have pressured profits and forced utilities to radically restructure in order to remain viable.
RWE plans to sell its 76.8 percent stake in Innogy to EON in a deal that includes 鈥渁 far-reaching exchange of assets and participation,鈥 said EON, which also plans a cash offer to the remaining Innogy shareholders.
RWE would, in turn, gain an effective participation of 16.67 percent in EON.
EON would also transfer to RWE most of its renewables business and the minority interests held by its subsidiary PreussenElektra in two RWE-operated nuclear power plants.
RWE would receive the Innogy renewables and gas storage business and Innogy鈥檚 stakes in the Austrian energy supplier Kelag.
The deal, still subject to antitrust clearances, would also see RWE make a cash payment of 1.5 billion euros to EON.
Following approval of both companies鈥 boards, the deal was expected to be signed shortly, said EON.
Innogy, a network, renewable and retail energy utility, has been in turmoil since Chief Executive Peter Terium resigned in December and Chief Financial Officer Bernhard Guenther fell victim to a recent acid attack.
It has also has been the target of persistent takeover speculation, with sources saying recently that RWE had talked to France鈥檚 Engie and Italy鈥檚 Enel about a possible asset-swap deal.
Business daily Handelsblatt said that 鈥渇or decades EON and RWE were bitter rivals. Now they have agreed on a spectacular deal that will shake up the European energy market.鈥
Under the country鈥檚 鈥渆nergy transition,鈥 Germany has raised the share of solar, wind and other renewables to about one third of electricity production.
As wholesale power prices have dropped, the big utilities have been forced into an ongoing process of restructuring.
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