Published: Tue, March 13, 2018
Markets | By Noel Gibbs

RWE to acquire Eon's renewables business

RWE to acquire Eon's renewables business

German energy giants E.On and RWE have reached an agreement on a major exchange of business activities, promising a significant shake-up of the duo's energy interests.

Following completion of the transaction, RWE would combine ownership of the renewables businesses of Eon and innogy, creating a leading European utility for renewables with a diversified portfolio of renewable and conventional generation assets. 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.

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. Chancellor Angela Merkel welcomed the deal and said she had faith in Germany's utilities to find the best way to adapt to the country's energy shift dubbed Energiewende.

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RWE had been in talks with European peers including Engie ENGIE.PA and Enel ENEI.MI over the past year on a potential transaction and was even close to reaching a deal with Iberdrola IBE.MC in late 2017, the sources said.

In a letter to staff seen by Reuters, Chief Executive Uwe Tigges said that Innogy's management and supervisory boards would thoroughly assess the planned deal, which was agreed in principle and still requires antitrust approval.

Innogy, which reported its annual results on Monday, said that it had so far not reflected on the proposal and would comment at a later stage.

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While the two companies were in touch with each other over the last year, concrete negotiations about Innogy only picked up this year, the sources said.

Eon would then focus on energy networks and retail, with RWE more generation focused. Chief executive Peter Terium resigned late previous year in the wake of a profit warning leaving Uwe Tigges as interim CEO.

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