IPPToday #180: E.ON and RWE announce asset swap deal with US$1.85 billion cash payment
Related M&A Transactions
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E.ON and RWE have announced an agreement regarding a far-reaching exchange of assets and interests, centred around E.ON's acquisition of RWE’s 76.8% stake in Innogy SE. The Supervisory Boards of both companies have approved the transaction.
Innogy SE is Germany’s leading energy company, with revenue of around EUR44 billion (US$54.3 billion) (2016), more than 40,000 employees and activities in 16 countries across Europe. It primarily operates through three segments: Grid & Infrastructure, Renewables, and Retail. The Grid & Infrastructure segment operates electricity and gas distribution grids in Germany and Eastern Europe with a length of approximately 574,000 kilometers serving approximately 16 million power and 7 million gas customers.
In return for its stake in Innogy, RWE will gain from E.ON:
- An effective participation of 16.67% in E.ON. The shares will be issued by way of a 20% capital increase against a contribution in kind from existing authorised capital.
- Most of E.ON's renewables business
- Minority interests in the RWE-operated nuclear power plants Emsland and Gundremmingen, currently held by E.ON’s subsidiary PreussenElektra
- The entire Innogy renewables business
- Innogy's gas storage business
- Innogy’s stakes in the Austrian energy supplier Kelag
The transfer of businesses and participations would be conducted with economic effect as of 1 January 2018.
The transaction further provides for a cash payment from RWE to E.ON of EUR1.5 billion (US$1.85 billion).
In addition, E.ON will make a voluntary public takeover offer in cash to the shareholders of Innogy. This offer would, as of today, represent a total value of EUR40 (US$49.3) per share for the Innogy shareholders. The total value consists of an offer price of EUR36.76 (US$45.3) per share plus assumed dividends of Innogy for the fiscal years 2017 and 2018 in the total aggregate amount of EUR3.24 (US$3.995) per share. RWE will not participate in the offer.
Once the transaction has closed and been successfully implemented, Innogy will be fully integrated into the E.ON Group, and the renewables businesses of E.ON and RWE will be brought together under the umbrella of RWE.
E.ON will make the voluntary tender offer later this year, meaning that the transaction should be completed in 2019. The asset transfer will be implemented in several steps.