German E.ON, RWE agree Innogy deal with major restructuring

  • German E.ON, RWE agree Innogy deal with major restructuring

German E.ON, RWE agree Innogy deal with major restructuring

Plans to break up Innogy and divide its assets between parent RWE and E.ON, first announced a day earlier, added 4.3 billion euros to the market value of Germany's three largest utilities in the sector's largest overhaul in recent history.

The logo of German energy company Innogy at its headquarters in Essen.

RWE would, in turn, gain an effective participation of 16.67 percent in E.ON. 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.

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.

Boards of both companies still need to approve the transaction.

The planned large-scale asset swap went down well with shareholders. Innogy and E.ON have also rallied. RWE kept 76.8 percent of Innogy after the 2016 carve-out.

Under the deal, which has been agreed in principle, RWE will receive Eon's renewables business, plus Innogy's renewables and gas storage businesses.

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 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. It has been in turmoil since former Chief Executive Peter Terium resigned in December and on Monday said it would cut 400 million euros in costs through the end of 2020.

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.