RWE and E.On agree on sale of Innogy stake

RWE and E.On agree on sale of Innogy stake

Shares surged after the announcement.

The deal values Innogy at about €22 billion ($27.1 billion), although the amount may be almost double when debt and other enterprise value is taken into account, Bloomberg quoted a source with knowledge of the deal as saying.

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

A source involved in the deal said it would be slightly more beneficial to E.ON, which would become a bigger regulated business by adding more networks, while RWE would end up owning interests in the riskier and more competitive renewables sector.

The somewhat complex deal involving shares and asset swaps will see RWE take over Eon's renewables business while Eon gets the retail and network businesses of both companies.

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As usual, the deal will need antitrust and regulatory approvals.

Innogy's fiscal year 2017 earnings forecast released Monday did not mention the coming deal.

Innogy, which reported a 3 percent rise in adjusted operating profit, also said it would propose an unchanged dividend of 1.60 euros per share for 2017, compared with the 1.61 euro average forecast in a Reuters poll. Fossil fuel still makes up about 10 percent of its capacity. Macquarie Group may acquire smaller businesses from the combined entity, including those in Eastern Europe - a claim Macquarie declined to comment upon.

Germany's energy market has been rapidly transformed since Chancellor Angela Merkel announced a phase-out of nuclear power after Japan's 2011 Fukushima Dai-ichi nuclear power plant meltdown.

However, with the help of the green energy, RWE will manage to close the nuclear plants and the challenges to the coal, as well as to find partners for the development of their wind farms.

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