German utility E.On says that it will “swiftly” integrate Innogy into its business following the approval of a complex merger deal between RWE and E.On by the European Commission.
The two energy giants last year announced proposals to divide and swap assets in a deal that will see E.On focus on energy networks and services to retail customers, and RWE become largely a renewable energy firm.
In February the Commission approved the acquisition by RWE of certain generation assets owned by E.On, but wanted to take a closer look at the retail side of the proposals over concerns about the impact on competition.
Following its investigation, the Commission concluded the deal would not result in significant loss of competition in Germany or other European markets.
The move means that RWE and E.On can complete the €43 billion deal, under which RWE will transfer its 76.8 per cent stake in Innogy to E.On in exchange for an equity interest of 16.7 per cent in E.On and a seat on its supervisory board.
E.On will also transfer its renewables activities and minority interests in two nuclear power plants to RWE. Innogy’s entire renewable energy business, gas storage business and stake in Austrian utility Kelag will come to RWE as “quickly as possible next year”, RWE said.
E.On will also receive financial compensation worth €1.5 billion from RWE.
“The new E.On’s future begins today,” said E.On CEO Johannes Teyssen. “The integration of innogy will create a company fully dedicated to putting customers at the center of everything it does.”
RWE said that the merger approval “paved the way for the new RWE” with plans to invest €1.5 billion net annually to consolidate its position as a leading renewable energy company. “Scale plays a major role in achieving success when competing in the field of renewable energy at a global level. We are powerful enough for this market – in terms of financial strength, strategy and personnel,” said RWE CFO Markus Krebber.