Released December 03, 2014 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Germany's largest utility E.ON AG (OTC:EONGY) (Dusseldorf, Germany) has announced plans to split its company into two in order to capitalise on the rise of renewable energy.
E.ON said that its main business will now focus on 'renewables, distribution networks, and customer solutions'. The split will see it combine its conventional generation, global energy trading, and exploration and production businesses in a new, independent company from 2016. The majority of the new company will be spun off to E.ON shareholders and no job losses are expected.
The move comes as the German power market continues to suffer from weak demand, a continued surge in renewables that is forcing the closure of coal and gas-fired plants and low wholesale electricity prices. E.ON's weak financial performance in recent years has also been contributed to by the German government's u-turn on nuclear power in 2011, which forced the immediate closure of older plants and the closure of all nuclear plants within the next decade. That decision alone has cost E.ON billions of euro in losses. For additional information, see June 15, 2012, article - E.ON Seeks 8 Billion from German Government.
"E.ON will focus entirely on renewables, distribution networks, and customer solutions and thus on the building blocks of the new energy world," explained E.ON CEO Johannes Teyssen. "It will consist primarily of our regional units' distribution and sales businesses in eight European markets, E.ON Climate & Renewables' wind and solar activities, E.ON Connecting Energies' distributed-generation and energy-efficiency business, and our stake in Enerjisa, our joint venture in Turkey. About 40,000 of our 60,000 employees currently work in these businesses."
The new company will focus on more conventional power generation, which E.ON argued will be essential to the continued rise of renewable energy.
Teyssen said: "The transformation of the energy system will continue to require reliable backup capacity well into the future as well as access to global markets for energy products. With a portfolio consisting of conventional power generation, global energy trading, and exploration and production, the New Company will focus precisely on meeting these needs".
In order to fund the creation of the new company, E.ON plans to sell all of its businesses in Spain and Portugal to Australian investment firm, Macquarie Group (ASX:MQG) (Sydney, Australia), for 2.5 billion ($3.1 billion). There are no planned job losses from the sale.
"We are pleased that in Macquarie we have found a good employer for our people. Macquarie has already proven its trustworthiness in the acquisition of our gas transmission business in Germany," Teyssen added.
E.ON is now exploring the disposal of its activities in Italy and will conduct a strategic review of its exploration and production business in the North Sea.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
E.ON said that its main business will now focus on 'renewables, distribution networks, and customer solutions'. The split will see it combine its conventional generation, global energy trading, and exploration and production businesses in a new, independent company from 2016. The majority of the new company will be spun off to E.ON shareholders and no job losses are expected.
The move comes as the German power market continues to suffer from weak demand, a continued surge in renewables that is forcing the closure of coal and gas-fired plants and low wholesale electricity prices. E.ON's weak financial performance in recent years has also been contributed to by the German government's u-turn on nuclear power in 2011, which forced the immediate closure of older plants and the closure of all nuclear plants within the next decade. That decision alone has cost E.ON billions of euro in losses. For additional information, see June 15, 2012, article - E.ON Seeks 8 Billion from German Government.
"E.ON will focus entirely on renewables, distribution networks, and customer solutions and thus on the building blocks of the new energy world," explained E.ON CEO Johannes Teyssen. "It will consist primarily of our regional units' distribution and sales businesses in eight European markets, E.ON Climate & Renewables' wind and solar activities, E.ON Connecting Energies' distributed-generation and energy-efficiency business, and our stake in Enerjisa, our joint venture in Turkey. About 40,000 of our 60,000 employees currently work in these businesses."
The new company will focus on more conventional power generation, which E.ON argued will be essential to the continued rise of renewable energy.
Teyssen said: "The transformation of the energy system will continue to require reliable backup capacity well into the future as well as access to global markets for energy products. With a portfolio consisting of conventional power generation, global energy trading, and exploration and production, the New Company will focus precisely on meeting these needs".
In order to fund the creation of the new company, E.ON plans to sell all of its businesses in Spain and Portugal to Australian investment firm, Macquarie Group (ASX:MQG) (Sydney, Australia), for 2.5 billion ($3.1 billion). There are no planned job losses from the sale.
"We are pleased that in Macquarie we have found a good employer for our people. Macquarie has already proven its trustworthiness in the acquisition of our gas transmission business in Germany," Teyssen added.
E.ON is now exploring the disposal of its activities in Italy and will conduct a strategic review of its exploration and production business in the North Sea.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
