Eon, RWE argree Innogy carve-up

Carla Harmon
March 12, 2018

Their proposed transaction comes just two years after RWE spun off its renewable, retail and network operations to form Innogy and E.ON split off some of its business to create Uniper (UN01.DE).

Plans to carve up Innogy (IGY.DE) between parent RWE (RWEG.DE) and rival German utility E.ON (EONGn.DE) drove its shares sharply higher on Monday, lifting the combined value of the three German energy firms by 5.7 billion euros ($7 billion).

Peter Altmaier, the next economy minister and a close ally of Merkel, said the deal was a effect of that shift, known as the "Energiewende" in German.

RWE plans to sell its 76.8 per cent stake in Innogy to EON in a deal that includes "a far-reaching exchange of assets and participations", said EON, which also plans a cash offer to the remaining Innogy shareholders.

"This looks like an advantageous step for E.ON at first glance", said Thomas Deser, fund manager at Union Investment, which holds shares in E.ON, RWE and Innogy. The renewables businesses of E.ON and RWE would be brought together under the umbrella of RWE. Through this transaction E.ON would become a focused customer-oriented energy company concentrating on energy networks and customer solutions.

The RWE-E.ON swap will also hand RWE - Germany's biggest electricity producer - a 16.67 percent stake in E.ON by way of a 20 percent capital increase.

Boards of both companies still need to approve the transaction.

Furthermore, E.ON would transfer to RWE the minority interests in RWE-operated German nuclear power plants, the innogy gas storage business and its stakes in the Austrian utility Kelag, the statement said.

The European Commission declined to comment.

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