April 24, 2018 / 10:33 AM / a month ago

Planned RWE/E.ON asset swap lacks clarity - Innogy boss

ESSEN, Germany (Reuters) - Innogy (IGY.DE) said on Tuesday a proposed deal by parent RWE (RWEG.DE) and rival E.ON (EONGn.DE) to break up the German energy group lacked clarity, adding it would comment on the transaction once the offer period had officially started.

Uwe Tigges, chief executive officer of German ecological power supplier Innogy SE, attends the company's annual general shareholders meeting in Essen, Germany April 24, 2018. REUTERS/Wolfgang Rattay

Last month, RWE and E.ON announced the landmark deal to split up Innogy’s assets between them and turn RWE into a renewables champion, while E.ON will become Europe’s largest operator of power and gas grids.

As part of the deal, E.ON will launch a 40 euros-per-share, or 5.2 billion euro (4.56 billion pounds), bid for Innogy’s minority shareholders, with the offer period expected to start at the end of April. That bid does not apply to Innogy parent RWE, which holds 76.8 percent of the group following an equity carve-out.

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“Most of the details, however, remain open,” Innogy Chief Executive Uwe Tigges told shareholders at the group’s annual general meeting, adding the group’s board would issue a reasoned opinion no later than two weeks after the offer period starts.

    Open questions in the transaction include uncertainty over where the brunt of the up to 5,000 jobs cuts that E.ON plans as part of the deal will occur, with Innogy demanding no forced layoffs at its operations.

    E.ON sees synergies of 600-800 million euros through the asset swap, that will see its renewable operations go to RWE, which will get a 16.7 percent stake in E.ON to become its largest shareholder.

    Under the deal, Innogy would effectively cease to exist once the deal has closed in the second half of 2019, only three years after it was split off from RWE and listed separately on the stock exchange.

    “The fact is that, as it stands today, Innogy is an economically independent and strong energy company,” Tigges said. “And that is how it will remain until such time as the transaction has been concluded.”

    Tigges was officially appointed as Innogy CEO on Tuesday, having filled in on an interim basis following the sudden departure of Peter Terium in December, just a week after a profit warning send the group’s shares tumbling.

    Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Tom Sims/David Evans

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