SSE Confident On npower Merger Despite E.ON Deal With Innogy

Ivan Schwartz
March 13, 2018

Analysts at Jefferies said that Innogy's takeover by Eon, which also has a substantial United Kingdom household supply business, could "complicate" the merger between SSE and Npower and make regulatory approval more complex.

RWE would, in turn, gain an effective participation of 16.67 percent in E.ON.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 12, 2018.

The aim is for EON to focus on the retail, energy networks and customer solutions business, while RWE would take over the renewables power generation of both companies. RWE will pay another 1.5 billion euros to E.ON to close a valuation gap that results from the complex structure of the asset swaps.

The source said that E.ON had been in a better bargaining position after RWE shopped Innogy to other European rivals, including France's Engie, Italy's Enel and Spain's Iberdrola, without striking a deal.

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The planned large-scale asset swap went down well with shareholders.

Innogy and E.ON have large overlapping retail businesses in Germany and Britain.

An agreement in principle has been reached for the sale of RWE's 76.8% stake in Innogy.

The complicated German deal has sparked fresh concerns within the Competition and Markets Authority (CMA) because it includes RWE's spin-off business Innogy, which is also Npower's parent company.

RWE said its plan is to combine the renewables businesses of Innogy and E.on to establish a greener utility with a broadly diversified portfolio of renewable and conventional power generation assets, which would be linked via its existing trading business. Chief executive Peter Terium resigned late past year in the wake of a profit warning leaving Uwe Tigges as interim CEO. Today it reported 2017 results, saying its adjusted net profit grew by 9% to more than Euro 1.22 billion.

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