RWE, E.ON, Innogy shares rise on German utilities deal

RWE shares are notably in the green Monday, as are E.ON shares, as the two German utilities companies agree an asset swap deal that will change the shape of the German energy market and break up utilities provider, Innogy.

Innogy was originally part of RWE, before being set up as an independent unit in 2016.

By 1300 BST, RWE shares were 7.84% higher at €19.40 and E.ON shares gained 4.37% to trade at €8.82. Innogy shares, meanwhile, surged 12.95% to hit €39.00.

Innogy carve up

RWE and E.ON both said on Sunday that they had reached an initial agreement to split ownership of Innogy and also swap other assets. The involved deal will see:

  • RWE sell its 76.8% stake in Innogy to E.ON.
  • RWE gain 16.67% of E.ON.
  • E.ON take over Innogy’s customer operations and regulated energy networks.
  • RWE to gain the renewables businesses of both Innogy and E.ON.  

The deal, which is yet to be approved or binding, will mark a change for RWE, which currently relies on coal and gas plants. The German utilities business would make a significant shift from fossil fuels to a more popular mix, including renewable energy sources.

“Following completion of the transaction, RWE would combine ownership of the renewables businesses of E.ON and innogy to create a leading European utility for renewables and security of supply with a broadly diversified portfolio of renewable and conventional generation assets, which would be linked via our existing trading business,” RWE said in a press release.

“Boards of both companies still need to approve the transaction,” RWE said.

E.ON similarly outlined its future, should the deal achieve approval.

“After successful implementation of the transaction it is intended to fully integrate innogy into the E.ON Group. Through this transaction E.ON would become a focused customer-oriented energy company concentrating on energy networks and customer solutions,” E.ON said.

Innogy to comment “in due course”

The initial agreement came hours before Innogy released its latest results, in which the energy company reported a 3% increase in adjusted operating profits. It also confirmed its outlook for 2018 as unchanged from the initial December 2017 view.

“We will comment on the latest announcements by RWE AG and E.ON SE in due course,” said Innogy CEO, Uwe Tigges.

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