German utilities E.ON and RWE ready to implement mega-merger
Following the European Commission's clearance of energy company E.ON's takeover of RWE subsidiary innogy's distribution and consumer solutions business on Tuesday, E.ON said it intended to "swiftly carry out the integration of innogy into the Group."
RWE said that the decision had "paved the way for one of the most important transformations in the history of German industry."
Central to the deal is an asset swap between RWE and E.ON valued at more than 40 billion euros (44 billion U.S. dollars). In the future, the "new RWE" will focus "primarily on electricity production increasingly based on renewables," while E.ON will not own any power plants but will focus on grids, gas and consumers.
"The agreements between RWE and E.ON will significantly spur the energy transition as they unite the strengths of the two companies and enable them to focus on their places in the value chain," said Rolf Martin Schmitz, chief executive officer (CEO) of RWE.
According to RWE, the German utility will now start with a renewables portfolio of an installed capacity of more than 9,000 megawatts.
"We intend annual net investments of 1.5 billion euros to consolidate and further strengthen this position. Now we are putting all our energy into tackling this task," Schmitz said.
E.ON, on the other hand, will now be "fully dedicated to putting customers at the center of everything it does," said CEO Johannes Teyssen.
Teyssen reaffirmed E.ON's target of achieving 600 million to 800 million euros in synergies from 2022 onward. "Our shareholders can count on that," he said.
To reach the synergy target, E.ON plans to reduce staff by up to 5,000, which is less than 7 percent of its total workforce.
"We are standing by our commitments. This also includes our commitment to implement the staff reductions in a socially responsible manner," Teyssen said. (1 euro = 1.10 U.S. dollar)