Npower merger 'on track' despite German utility mega

Npower merger 'on track' despite German utility mega

Npower merger 'on track' despite German utility mega

Following completion of the transaction, RWE would combine ownership of the renewables businesses of E.ON and innogy to create a leading European utility for renewables and security of supply with a broadly diversified portfolio of renewable and conventional generation assets, which would be linked via our existing trading business.

It would leave E.ON operating primarily as an energy networks and retail specialist, with RWE significantly strengthening its position in the renewables and clean energy generation markets.

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

EON has spun off its fossil fuel operations and invested heavily in renewables, while RWE remains the biggest power producer. 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.

"It's good if there are competitive and internationally oriented energy providers in Germany", she said in a statement.

The German energy giants confirmed an agreement has been reached, subject to board approval, after reports over the weekend revealed a complex cash, shares, and assets deal was under negotiation.

If approved, the deal would spell the end for Innogy as a standalone company. "Through this transaction E.ON would become a focused customer-oriented energy company concentrating on energy networks and customer solutions". 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.

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