UPDATE 1-RWE may seal 1 bln eur grid sale this week -sources

Wed Jul 13, 2011 5:09pm BST

Quotes

   

* Sale of German power grid possible this week -sources

* Price discussed is about 1 bln eur including debt -sources

* Buyers include insurers Munich Re, Talanx -sources

* RWE shares rise 0.9 pct, peers up 0.7 pct

(Adds quote, details on price)

By Peter Dinkloh and Tom Kaeckenhoff

DUESSELDORF/FRANKFURT, July 13 (Reuters) - Germany's RWE , Europe's fifth-largest utility, might be able to clinch a 1 billion euro ($1.4 billion) deal to sell its German long-distance power grid this week, two people familiar with the matter told Reuters.

"We are close to the end," said a third person, who is close to the potential buyers, on Wednesday.

The consortium buying the 75 percent stake RWE wants to sell includes five pension funds of German and Swiss insurers, including Munich Re (MUVGn.DE) and Talanx , the two sources said.

RWE is the third German utility to sell its high-voltage power grid as regulation diminishes returns from the networks and weak power and gas prices as well as a tax on their nuclear power plants make the utility predict three years of falling profits.

Chief Executive Juergen Grossmann has said he plans to sell assets for 8 billion euros, but people with knowledge of the matter told Reuters that he also considered giving up control of the utility and merging it with Spanish peer Iberdrola .

The 113-year old utility, which coordinates power flows in much of western Europe, is discussing selling the grid for about 1 billion euros, including debt, two of the sources said.

That sum represents the so-called regulatory asset value of the 11,000 kilometre network, which is the value the grid regulator uses to calculate the allowed returns for the grid.

It wants to retain operational control of the network after the sale, the sources said.

RWE, Commerzbank and the insurers declined to comment.

RWE shares closed up 1 percent to 35.865 euros, while the Stoxx 600 utilities index rose about 0.7 percent.

The deal has already been close to being finalised several times, but was delayed by various problems, one of the sources said.

"One time, one party dropped out of the consortium and another had to be found."

Later, minor issues regarding the legal fine print and financial governance needed to be cleared up, the person said.

The grid, owned by an RWE unit called Amprion, spans the energy-hungry Rhine/Ruhr industrial region and the hydroelectric power plants in the Swiss Alps. (Additional reporting by Arno Schuetze; Writing by Peter Dinkloh; Editing by Will Waterman) ($1=.6991 Euro)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.