RWE and E.On agree on sale of Innogy stake

RWE and E.On agree on sale of Innogy stake

RWE and E.On agree on sale of Innogy stake

Two bankers who have worked on previous Innogy deals put the chances of a rival bid for the German energy company as "very low" to "zero", since Innogy has already explored alternative deals with other candidates.

"Overall, we view the planned transaction between RWE AG and E.ON SE as positive, from a strategic as well as a financial point of view", municipal shareholders in RWE, which together hold about 23 percent in the group, said. In recent years both RWE and E.ON have sought to split their operations into forward-facing business units focused on renewables and smart grids and legacy operations holding the bulk of their fossil fuel assets.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 12, 2018.

It would leave E.ON operating primarily as an energy networks and retail specialist, with RWE significantly strengthening its position in the renewables and clean energy generation markets.

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RWE is being advised by Bank of America Merrill Lynch and Citi on the deal, E.ON has hired Perella Weinberg Partners and BNP. One source said Australia's Macquarie MQG.AX had also been in the race. RWE kept 76.8 percent of Innogy after the 2016 carve-out.

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. Eon would transfer to RWE most of its renewables business and minority interests now held by Eon's subsidiary PreussenElektra in the RWE-operated nuclear power plants Emsland and Gundremmingen.

Former Innogy chief executive Peter Terium left the company in late 2017, following a profit warning, but people close to the matter said that the real reason for his departure was his opposition to the asset swap.

Today saw the publication of innogy's full-year results for 2017, reporting a 9% increase in net income to more than €1.2 billion.

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