RWE Shares Soar After Report Innogy Unit is Engie Takeover Target
14 March 2017 - 9:03PM
Dow Jones News
By Natascha Divac
FRANKFURT--Shares in German energy producer RWE AG (RWE.XE) and
its renewables unit Innogy SE, soared Tuesday following a report
that French gas monopoly Engie SA was interested in acquiring newly
spun-off Innogy.
Shortly after opening, RWE and Innogy jumped more than 7% and 5%
respectively, before shedding gains. At 0843 GMT shares in RWE,
which still owns 77% in Innogy, traded 5.5% higher, while Innogy
was up 3.8% at EUR34.70 ($37.05).
Bloomberg reported late Monday that Engie was weighing an offer
for Innogy, citing people familiar with the matter. The
deliberations were preliminary and may not lead to an offer,
Bloomberg reported.
In a statement early Tuesday, RWE declined to comment on the
report. It added that a full sale wasn't foreseen in any part of
its spin-off strategy, which separated its wind, solar, grid and
retail business into the new company. RWE added it could "in
principle sell... shares and thereby reduce its stake to 51%," but
that no decision has been taken.
Innogy has a market value of roughly EUR18.6 billion based on
Monday's closing price.
Traders dismissed the speculation early Tuesday. "If Engie was
interested in Innogy, it could have gotten it at a lower price and
more easily at the time of the spin-off," said one trader.
Like other utilities in Germany and parts of Europe, RWE has
been hurt by low wholesale electricity prices amid a power glut
spawned by a rise in renewable energy and low commodity prices. To
respond to the tough conditions, both RWE and its main competitor
E.ON SE have split themselves in two, separating their renewable
segments into new companies.
"While Innogy's businesses would clearly fit with Engie's new
strategy to focus on renewables, infrastructure and customer
solutions, a transaction would seem surprising in our view as Engie
seemed more inclined to pursue bolt-on acquisitions rather than big
transformative deals," said an analyst at Bryan Garnier.
"More importantly, RWE does not appear inclined to fully sell
its current stake in Innogy, which was confirmed by the group
yesterday evening. In all, we believe such an acquisition would add
complexity and uncertainty to Engie's case."
Michael Denzin contributed to this article
Write to Natascha Divac at natascha.divac@wsj.com
(END) Dow Jones Newswires
March 14, 2017 05:48 ET (09:48 GMT)
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