RWE’s transaction with Eon, which will see it become a leading global renewable energy supplier, is expected to close next month according to the German utility.
RWE said its positive first half year results, mainly driven by a strong trading performance, is providing “tailwind” for the deal.
RWE chief executive Rolf Martin Schmitz (pictured) said: “The framework for the future RWE Renewables has been defined, we have chosen the management team, and the integration has been prepared as far as we can under competition law. We’re ready to go.”
The transaction will turn RWE into the second-largest offshore wind farm operator, making the company one of the world’s leading renewable energy suppliers.
RWE’s renewable energy portfolio will have a total capacity of about 9GW gigawatts. The company will set aside a net €1.5bn each year to continue expanding the business.
The RWE-Eon transaction is being completed in two stages.
Initially Eon will receive RWE’s 76.8 % stake in Innogy and a payment of €1.5bn, while RWE will acquire a financial investment in Eon of 16.67% and take over the latter’s minority shares in the Gundremmingen (25%) and Emsland (12.5%) nuclear power plants.
Then, Eon will transfer its renewable energy activities and those belonging to Innogy to RWE, which will also receive the gas storage business and the minority interest in the Austrian utility Kelag (37.9%) from the Innogy portfolio.
In RWE’s first half year results Innogy saw a 72% rise in earnings before interest and tax (EBIT) to €270m, compared with the same period last year, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose to €461m, up from €368m in the same period in 2018.
Higher output at Innogy’s wind farms, due to more favourable weather compared with 2018, contributed to the boost in earnings, which saw Innogy outperform RWE business units lignite and nuclear and European power.
According to RWE its renewables trading assets that are not subsidised with fixed feed-in compensation, benefitted from higher wholesale electricity prices in the first half of 2019, compared with the same period last year.
In addition the ongoing growth of Innogy’s wind portfolio also had a positive impact on earnings.