2nd UPDATE: E.ON To Sell Pwr Grid To TenneT For EUR1 Billion -Source
10 November 2009 - 6:16AM
Dow Jones News
E.ON AG's (EOAN.XE, EONGY) supervisory board has approved the
sale of the company's German power transmission grid to Dutch
electricity network operator TenneT Holding BV for around EUR1
billion, a person familiar with the matter told Dow Jones Newswires
Monday.
At a meeting earlier Monday, the German utility's supervisory
board agreed to sell the around 10,700-kilometer power transmission
grid as of Jan. 1, 2010, the person said.
"The price is slightly higher than EUR1 billion," the person
added.
This price would be in line with recent press reports, but is
considerably below analysts' estimates of the value of the
grid.
Citigroup, in a research note published earlier Monday,
estimated the E.ON grid to be worth around EUR1.6 billion.
The E.ON grid unit, called Transpower Stromuebertragungs GmbH,
employs around 700 people and generated around EUR6.2 billion in
revenue in 2008. The network stretches from Germany's North Sea
coast and the Danish border to the Alpine border of Austria in the
far south of Germany.
Under the terms of the deal, TenneT would be required to keep
the asset for at least five years, the person said.
E.ON and TenneT declined to comment.
E.ON last year committed to sell the electricity network in a
deal it struck with the European Commission, which had investigated
the company for alleged market abuse. The probe was subsequently
dropped in return for E.ON pledging to sell the grid.
The agreement between E.ON and TenneT comes more quickly than
many market observers had expected, given that the E.U. had granted
E.ON a two-year deadline to finalize the divestment. That deadline
would have expired in Nov. 2010.
The sale is also part of E.ON's plan to sell at least EUR10
billion worth of assets by the end of 2010 in an effort to lower
its debt pile - which it built up in an acquisitions spree over the
past two years - and refocus its business.
E.ON is the second power transmission grid operator in Germany
to sell its network.
Vattenfall Europe AG - the German unit of Sweden's state-owned
Vattenfall AB - is understood to have principally agreed to sell
its 9,500-kilometer power grid to a consortium consisting of
Goldman Sachs Group Inc. (GS), Deutsche Bank AG's (DB)
infrastructure fund RREEF and Allianz SE (ALV.XE) for around EUR500
million and a pledge the new owners will invest between EUR3
billion and EUR5 billion in the expansion of the grid.
The buyers of the E.ON and Vattenfall Europe grids will have to
invest considerable amounts in coming years to ensure that
Germany's growing offshore wind generation capacity will be
connected to the grid.
The person familiar with E.ON's plan to sell the grid to TenneT
Monday said that the Dutch network operator didn't have to make
specific investment promises.
"TenneT merely has to fulfill German laws that require grid
operators to guarantee security of supply and ensure network
connections for the increasing number of offshore wind parks," the
person said.
The fact that E.ON's and Vattenfall's grids will be acquired by
two separate investors represents a blow to plans to form a single
German power grid operator. The new government and the country's
grid regulator are in favor of merging the grids, saying a combined
grid could generate considerably cost and efficiency synergies.
RWE AG (RWE.XE) and EnBW Energie Baden Wuerttemberg AG (EBK.XE)
- the two remaining power transmission grid operators - have
repeatedly ruled out selling their networks because they consider
them part of their core business.
Company Web site: www.eon.com
-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503;
jan.hromadko@dowjones.com
Allianz Ag Muenchen Namen (PK) (USOTC:ALIZF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Allianz Ag Muenchen Namen (PK) (USOTC:ALIZF)
Historical Stock Chart
From Jul 2023 to Jul 2024