E.ON and Statkraft in $8 Billion Renewables-Driven Asset Swap

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Researched by Industrial Info Resources (Sugar Land, Texas)--At the end of 2008 Statkraft (Oslo, Norway) will become the largest producer of renewable energy in Europe. This will result from an asset swap with E.ON (OTC:EONGY) (Duesseldorf, Germany) in which Statkraft will take over power and district heating plants in Sweden, Germany and the United Kingdom. The deal has been in the process of receiving the necessary approvals of the antitrust authorities.

In terms of the initial swap agreement signed in Stockholm in July, E.ON will acquire Statkraft's 44.6% share in E.ON Sverige and a hydropower plant in Sweden for about $5.6 billion. Statkraft will acquire E.ON AG shares worth about $2.7 billion. In terms of physical assets, Statkraft will acquire 40 hydropower plants in Sweden with an average annual generating capacity of 975 megawatts (MW); five district heating plants in Sweden producing 300 gigawatt-hours of electricity; two gas power plants in Germany with a combined capacity of 917 MW; one 56-MW hydropower plant in the United Kingdom; and shares in two biomass power stations in Germany with a combined capacity of 16 MW. The company will also benefit from a structured gas contract of 100 million cubic meters for 10 years and a 100-MW power supply contract for 10 years. Through the share acquisition, the Swedish company will become E.ON's largest industrial owner.

E.ON will focus on new energy production projects in the Nordic region and will invest about $2.4 billion on power grids and metering, $660 million on hydropower and about $725 million on wind power projects. It is currently building the second phase of the 207-MW Rodsand II offshore windfarm off the coast of Denmark.

In another move to reinforce the claim to be Europe's leading renewables company, Statkraft has launched an international online platform "My CO2.NO," which enables individuals and companies to neutralize their CO2 emissions by buying certified emission reduction credits generated by projects in developing countries. The platform has been developed in Norway and is now available in English, Dutch and German. It will also be offered to partners as a contribution to emissions reductions.

In the 2007-10 period, E.ON, which operates in more than 25 European countries, will invest about $63 billion in power generation, including $6 billion in renewable projects worldwide. The company is targeting CO2-emissions reductions based on 1990 levels by 50% by 2030. Statkraft currently has a presence in 10 countries and is looking to expand in Africa and Latin America. The company operates projects across the renewable spectrum and is a major player in European energy exchanges.

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