Europe Clears $68 Billion RWE-E.ON Asset Swap

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The largest asset swap in the history of the European power sector has taken a step closer to completion after been cleared by the European Commission (EC).

The complex swap, valued at roughly 60 billion euro ($68 billion), will see Germany's RWE AG (FWB:RWE) (Essen, Germany) take control of the renewable energy and nuclear assets of E.ON SE (FWB:EOAN) (Düsseldorf), Germany's largest power player. E.ON will purchase RWE's 76.8% stake in innogy SE, the company's spun-off renewable energy business, but will return the renewable energy and gas storage assets since its main goal is to control RWE's grid operations. On completion, RWE will be primarily active in upstream electricity generation and wholesale markets, whereas E.ON will focus on the distribution and retail of electricity and gas. Industrial Info reported on the proposed deal last year. For additional information, see August 21, 2018, article - Germany's E.ON and RWE Agree $74 Billion Asset Swap.

"The Commission assessed the impact of the transaction on the generation and wholesale supply of electricity...and received feedback from a large number of competitors and customers of RWE and E.ON, as well as regulators, municipalities, grid operators and energy exchanges," the EC stated. "The Commission's investigation found that the transaction is unlikely to hinder effective competition in the generation and wholesale supply of electricity. RWE would continue facing effective competition after the transaction on the markets for generation and wholesale supply of electricity, and cleared the case unconditionally."

"This is very good news," commented Markus Krebber, chief financial officer of RWE. "Thanks to this decision, we have passed another milestone en route to turning RWE into a leading global player in the field of renewable energy."

RWE intends to complete the transaction in the second half of 2019, becoming Europe's third-largest producer of electricity from renewables and the world´s second-largest player in offshore wind "in one fell swoop", the company stated. Roughly 60% of RWE's generation portfolio will come from "low or zero carbon emissions" sources, and it plans to spend up to 1.5 billion euro ($1.7 billion) every year to expand its clean energy portfolio. RWE will take over E.ON's minority interests in the Emsland and Gundremmingen nuclear power stations operated by RWE, innogy's gas storage business and its stake in the Austrian power utility Kelag.

E.ON's acquisition of RWE's distribution and retail business is being assessed separately by the Commission and is still under review.

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