EU conditionally clears E.ON's acquisition of Innogy assets
The European Commission has conditionally cleared E.ON's proposed acquisition of Innogy's distribution and consumer solutions business, as well as some of its electricity generation assets.
The Commission pointed out that E.ON and RWE, which controls Innogy, are both energy companies based in Germany, with activities that "mostly overlap" in Czech Republic, Germany, Hungary, Slovakia and the UK.
To address the EC's competition concerns, E.ON has agreed to divest most of its customers supplied with heating electricity in Germany and to discontinue the operation of 34 electric charging stations on German motorways. It will also divest its business in the retail supply of electricity to unregulated customers in Hungary and Innogy's retail power and gas business in Czech Republic.
Commissioner Margrethe Vestager, in charge of competition policy, said: "It is important that all Europeans and businesses can buy electricity and gas at competitive prices. Today, we can approve the acquisition of Innogy by E.ON because the commitments offered by E.ON will ensure that the merger will not lead to less choice and higher prices in the countries where these companies operate."
RBC Capital Markets analyst John Musk said: "Overall, this announcement is very much in line with expectations following E.ON’s offer to divest some businesses in Germany, Hungary and the Czech Republic as part of negotiations over the summer, which E.ON discussed at its half year results.
"The overall earnings before interest and tax impact of the three divestments is low triple-digit million as disclosed at 1H19. For both E.ON and RWE the approval removes the last significant hurdle in the transaction, and should allow the two companies to now go through the necessary closing stages for the transaction to complete by early 2020."
Musk added: "We continue to believe RWE has the better end of the transaction. As the coal/lignite phase out in Germany and wider Europe accelerates, we believe the renewables businesses of innogy and E.ON, which will pass onto RWE, now give RWE a solid platform for future renewables growth on a global scale. Conversely the outlook for E.ON seems more challenged as retail markets looks problematic."