RWE Launches New Renewable Energy Business

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--German energy giant RWE AG (FWB:RWE) (Essen, Germany) has completed the creation of a new subsidiary to cover renewable energy, electricity grids and retail operations.

The new company has just started operating under the temporary name of RWE International SE. It will have an expected turnover of 40 billion euro ($45.4 billion) and employ around 40,000 employees. RWE expects to brand the company this summer and list 10% of it before the end of the year to raise an estimated 2 billion euro ($2.3 billion).

The launch follows through on last December's announcement that RWE planned to split its company in two in an effort to separate the more profitable renewables division from its loss-making conventional power business. The move mirrors a similar restructuring tactic by its larger German peer and Europe's largest power company, E.ON SE (FWB:EOAN) (Düsseldorf). Earlier this year, E.ON officially split its business operations into two, creating a new company called Uniper to handle conventional power generation (hydro, natural gas, coal) and global energy trading. For additional information, see January 6, 2016, article--E.ON Splits Power Business.

Both companies have suffered major losses in recent years thanks to continued weak electricity demand, the closure of conventional power plants and billions of euro in impairment costs against the shut-down of their nuclear power plants as a result of the 2011 decision by the German government to exit nuclear power.

"The founding of our subsidiary and the planned IPO are mammoth tasks," explained Peter Terium, chief executive officer of both RWE AG and the new subsidiary. "Thanks to the excellent preparatory work done by our employees, we are, however, right on schedule. We will be fast, decentralised, innovative and close to our customers. During this time of far-reaching transformation in our sector, we do not intend to simply keep up with the competition. We want to take a pioneering role and shape the energy market of the future."

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