RWE to acquire Eon's renewables business

Groundbreaking deal in German utility market with EON to acquire Innogy from RWE

RWE plans to combine Eon and Innogy's renewables businesses into what it called a "leading European utility for renewables and security of supply with a broadly diversified portfolio of renewable and conventional generation assets".

As per the deal, RWE's 76.8% stake in innogy is valued with EUR40.00 per share including the expected dividends of EUR3.24 per share in total for 2017 and 2018, which RWE would still receive until the expected closing of the transaction.

But the heart of the agreement is to give E.ON the retail and network businesses of both companies, and give RWE the combined renewable-generation businesses.

Analysts at Jefferies said that Innogy's takeover by Eon, which also has a substantial United Kingdom household supply business, could "complicate" the merger between SSE and Npower and make regulatory approval more complex.

RWE and E.ON are making these massive reorganizations faced with the rise of wind and solar power in Germany and across Europe, which has undercut the markets and profits for fossil fuels and nuclear power plants. Further, RWE will receive the minority interests now held by E.ON's subsidiary PreussenElektra in the RWE-operated nuclear power plants Gundremmingen and Emsland. 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.

Before striking a deal with E.ON, RWE held talks with European peers Enel and Engie and came close to a deal with Spain's Iberdrola before Christmas, people familiar with the matter said. Goldman Sachs is working for Innogy, sources said. The supervisory boards of both RWE and E.ON have approved the transaction.

Germany's cartel office said it was too early to comment on possible hurdles in the planned asset swap deal.

If approved, the deal would spell the end for Innogy as a standalone company.

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