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Germany’s RWE to divest majority stake in Innogy to E.ON

EBR Staff Writer Published 12 March 2018

German energy company RWE has agreed to sell its majority stake in Innogy to Germany-based electric utility service provider E.ON in exchange of assets.

As part of the agreement in principle, EON will acquire RWE’s 76.8% stake in Innogy in exchange for 16.7% of EON’s equity to RWE. The deal values Innogy at nearly $27.1bn. 

E.ON said: “The shares would be issued by way of a 20% capital increase against a contribution in kind from existing authorized capital.”

The transaction will include a wide-ranging exchange of business activities and participations as well as €1.5bn ($1.85bn) cash payment by RWE to E.ON.

REW said in a statement: “In this transaction, RWE’s 76.8% stake in innogy would be valued with €40.00 per share including the expected dividends of €3.24 per share in total for the fiscal years 2017 (to be paid in 2018) and 2018 (to be paid in 2019), which RWE would still receive until the expected closing of the transaction.”

The deal will allow EON to remain focused on energy networks and customer solutions, while the combined renewable-generation businesses will be brought under RWE.

This include transferring of most of E.ON’s renewables business and also the minority interests held by E.ON’s subsidiary PreussenElektra in the RWE-operated nuclear power plants Emsland and Gundremmingen to RWE.

Additionally, the entire Innogy renewables business, the innogy gas storage business and Innogy’s stakes in the Austrian energy supplier Kelag will be retained by RWE.

Upon completion of the deal, RWE will combine ownership of the renewable businesses of E.ON and Innogy to create a European utility for renewables and security of supply.

RWE said that the new utility will have a broadly diversified portfolio of renewable and conventional generation assets.

E.ON and RWE are due to sign binding agreements and receive board approvals for the transaction.

Additionally, E.ON said it would make a voluntary public takeover offer in cash of up to €40.00 per share to Innogy’s minority shareholders.

Image: E.ON headquarters in Essen, Germany. Photo: courtesy of Wiki05/Wikipedia.