German energy utility E.ON SE (EOAN.XE) intends to sell its
entire Italian and Spanish operations as part of a broader strategy
to center its European business around its home market Germany,
weekly magazine Der Spiegel reports Friday without identifying its
sources.
The disposals would include conventional power plants fueled by
coal and gas, as well as renewable energies, such as wind and solar
farms or hydroelectric plants, the report says. E.ON's new European
focus will include the U.K. and Swedish energy markets.
E.ON declined to comment on the report in Der Spiegel, saying
only: "We are continuously reviewing the strategic options for
optimizing our entire portfolio across our Group."
The company owns and operates power plants with a capacity of
more than 6.2-gigawatts in Italy and some 4.5-gigawatts in Spain.
E.ON expanded into these markets after a failed attempt to buy
Spanish utility Endesa SA in 2008.
Endesa was instead sold to Italy's Enel SpA, which in turn
agreed to sell some power plants and energy distribution assets in
Italy, Spain and France to E.ON. That transaction was worth around
11 billion euros ($15 billion).
E.ON's expansion into southern Europe was initially aimed at
reaping the benefits of robust economic growth in the region. The
global financial crisis and the subsequent sovereign debt crisis in
the euro zone, however, up-ended that plan.
Poorly performing economies and Europe's heavy subsidies for
renewable energies have resulted in a power capacity glut, which
has depressed utilities' earnings across the continent. The
situation was further exacerbated by repeated government
intervention into energy markets, including the introduction of new
taxes.
Like many other power generators, E.ON has responded by cutting
costs, reducing investment and selling assets worth more than EUR18
billion. It has also shifted its focus to emerging markets outside
Europe, including Russia, Turkey and Brazil, in anticipation of
higher energy demand growth than in its European home markets.
Magazine website: www.spiegel.de
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