RWE and E.On’s Innogy asset swap aims at ‘creating a leading European utility on renewables’

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RWE solar farm in Hungary. Image: RWE.

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.

And the deal could see the creation of a new European renewables giant.

The complex deal would see RWE sell its remaining stake in innogy to E.On but keep hold of all of innogy’s renewables interests. It would combine these with those of E.On, creating what RWE has termed a “leading European utility for renewables” with a “broadly diversified portfolio” of assets.

The two parties confirmed in statements issued yesterday that an agreement had been reached for a “wide-ranging exchange of business activities and participations”. 

E.On is to gain RWE’s 76.8% stake in innogy in exchange for a 16.67% stake in E.On. Various other business activities would also be exchanged, while RWE would also make a €1.5 billion (US$1.84 billion) cash payment to E.On under the terms of the agreement.

E.On will meanwhile make a voluntary public takeover offer in cash to innogy’s minority shareholders, offering €40 per share. 

While an agreement has been reached, closure of the transactions still require board approval on both sides and would also need to clear antitrust and regulatory approvals.

Representatives from neither company have offered any commentary on the deal, however E.On is to present its 2017 annual report and provide a strategic update for 2018 later this week (Wednesday 14 March). 

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. Uwe Tigges, chief executive officer at innogy, said it would be commenting on announcements from RWE and E.On “in due course”.

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