2nd UPDATE:E.ON Boosts French Position Via EDF,EnBW Asset Swap
01 October 2009 - 9:57PM
Dow Jones News
German utility E.ON AG (EOAN.XE) said Thursday it has agreed to
swap assets with Electricite de France SA (EDF.FR) and EnBW Energie
Baden-Wuerttemberg AG (EBK.XE), bolstering its position as France's
third largest power company.
Under the deal, E.ON will receive 800 megawatts of nuclear power
capacity in France from EnBW. Germany's largest utility by market
value and sales will further acquire the 35% stake it doesn't
already own in SNET from EDF and Charbonnages de France, making it
the sole owner of SNET.
EnBW will receive nuclear power drawing rights from reactors in
Germany. In addition, it will also acquire E.ON's 50.4% stake in a
coal-fired power plant in Rostock, which reflects a power
generation capacity of 256MW, and 159MW in drawing rights from the
Buschhaus coal-fired power plant.
The completion of the transaction is still subject to approval
of the companies' supervisory boards and antitrust authorities,
E.ON said.
"By fully taking over SNET we are now able to better bundle our
activities in France and tap valuable synergies," E.ON Chief
Executive Wulf Bernotat said in a written statement.
E.ON acquired 65% in SNET in 2008 following its failed bid for
Spain's Endesa SA (ELE.MC). SNET was previously owned by Endesa but
Italy's Enel SpA (ENEL.MI), which beat E.ON in the race for control
of Endesa, sold SNET and other assets in Italy and Spain to the
German company.
For EnBW, around 45% of which is owned by EDF, the asset swap
helps further increase its power generation capacity in its home
market Germany by approximately 1.2 gigawatts.
"We have always emphasized that increasing and strengthening our
generation capacity in Germany is one of our central strategic
goals," EnBW Chief Executive Hans-Peter Villis said.
UniCredit credit analyst Christian Kleindienst in a research
note Thursday said the German general election last Sunday, which
the pro-nuclear energy Christian Democrats and Liberals won, may
have paved the way for the asset swap between E.ON, EDF and
EnBW.
The new center-right government that will likely emerge from
coalition talks starting next week is widely expected to extend the
operating lives of Germany's 17 nuclear reactors, all of which are
currently foreseen to be shut down, one-by-one, by around 2021.
EnBW relies heavily on nuclear power and has been looking to
diversify its power plant fleet due to the planned nuclear phase
out. At the end of 2008, EnBW's share of German nuclear power
generation was just under 60%.
Thursday's asset swap with EDF and EnBW is part of a deal E.ON
struck with the European Commission in 2008. At the time, E.ON
committed to selling 5GW of power generation capacity and its
German power transmission grid. In return, the E.U. dropped two
antitrust cases against the company.
The E.U. had targeted E.ON over concerns that the German utility
was abusing its dominant position in the German power generation
and electricity grid market.
By swapping assets with EDF and EnBW, E.ON has now divested more
than 4.4GW of generation capacity. Previous deals were struck with
Norway's Statkraft, France's GDF Suez SA (GSZ.FR), Austria's
Verbund AG (VER.VI) and EnBW.
The divestitures are also part of E.ON's plan to shed assets
worth at least EUR10 billion by the end of 2010, as it bids to
refocus its business and reign in debt which surged after a two
year spending spree across Europe.
At 1109 GMT E.ON shares traded 0.3% lower at EUR28.89 in line
with a softer German bluechip DAX index.
Company Web sites: www.eon.com; www.edf.com; www.enbw.com
-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503;
jan.hromadko@dowjones.com
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