EC approves RWE/E.On asset swap

The European Commission has approved a £40 billion asset swap between E.On and RWE that will reshape the two energy giants.

The asset swap had aleady been approved by competition authorities in Germany and the UK.  E.On told Innogy’s board earlier this month that it would “swiftly” integrate Innogy as soon as it got the EC go-ahead. It plans to use a ‘merger squeeze-out’ option that will pay off minority shareholders. This option is available under German law if E.On holds 90% of Innogy, which it will have acquired: 76.8% of all shares wil come from RWE, 9.4% from a voluntary takeover offer and 3.8% acquired via the stock market by E.On. The amount of cash compensation is being determined by an audit company.

After the intial acquisition, all of Innogy’s renewable energy business, gas storage business and stake in Austrian utility Kelag will be transferred to RWE. In addition, as of 30 September 2019 all of E.On’s renewables activities and its minority interests in the Emsland and Gundremmingen nuclear power stations will also be transferred to RWE .

“The agreements between RWE and E.On will significantly spur the energy transition as they unite the strengths of the two companies and enable them to focus on their places in the value chain,” said Rolf Martin Schmitz, chief executive of RWE.  RWE will focus on electricity production increasingly based on renewables, starting with a 9GW renewables portfolio. It has promised €1.5 billion annually invested in the project pipeline.  “Scale plays a major role in achieving success when competing in the field of renewable energy at a global level. We are powerful enough for this market – in terms of financial strength, strategy and personnel,” said RWE chief financial officer Markus Krebber.

Of the rest of Innogy’s business, E.On said, “We’ll initially manage Innogy as an E.On Group subsidiary and, in the upcoming integration phase, will gradually adjust its corporate governance as is customary in such processes. Our aim is and remains the swift and complete integration of Innogy.” Chief executive Johannes Theyssen promised an innovative E.On in future, saying: “The design of our network business, for example, will adopt E.On’s approach. Our network companies rank among the most efficient in Germany. Network customers benefit from this. Going forward, we want to achieve this for as many of our distribution networks in Europe as possible. E-mobility, on the other hand, is an example of a business where we want to leverage Innogy’s special capabilities in order to offer our customers even more attractive options for switching to an electric vehicle.”