E.ON to buy RWE subsidiary Innogy

Eon RWE argree Innogy carve-up image

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.

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. RWE and E.ON, whose share prices collapsed over the past decade, rose 11 and 4.6 percent respectively. 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.

Uwe Tigges, chief executive of German ecological power supplier Innogy SE, and Hans Buenting, acting chief financial officer, leave the company's annual news conference in Essen, Germany March 12, 2018.

This move would transform both companies, giving RWE a combined share in wind power second only to Iberdrola in Europe, and giving E.ON a share of the retail market that could raise antitrust implications in Germany, where the two companies are already dominant players, and in the United Kingdom, where they are two of the six biggest retailers. RWE will pay another 1.5 billion euros to E.ON to close a valuation gap that results from the complex structure of the asset swaps.

SSE said Monday one agreement of its merger with npower was approval from Innogy's supervisory board, and this, it said, included no provision related to a change of control.

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

Innogy and E.ON have large overlapping retail businesses in Germany, Britain and the Czech Republic.

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. Today it reported 2017 results, saying its adjusted net profit grew by 9% to more than Euro 1.22 billion.

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