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RWE and Engie looking into possible combination
Posted on Friday, 19 May 2017 13:43
European electricity utilities RWE and Engie are mulling over an amalgamation which could take the form of a share swap, according to Reuters.

Citing undisclosed sources, the news provider said if a deal goes ahead it would create a Franco-German behemoth worth around EUR 50.00 billion.

However, the people cautioned that no discussions are currently taking place between executives at the parties, but options are being talked through with advisors and bankers.

According to four investment banking sources, potential courses of action include RWE swapping its Innogy stake, which totals 76.8 per cent, for a minority holding in Engie.

However, these people added that a deal will not take place before the upcoming German federal election, which is currently scheduled for 24th September 2017.

Reuters also cited a separate source from the French government, who confirmed that talks are being held, while warning that this is no guarantee of a combination going ahead.

The deal is not expected to result in the closure of any plants by either RWE or Engie and Reuters noted that the resulting business from a deal would go a long way to establishing a Franco-German alliance in the energy sector.

None of the parties involved have commented on the report.

According to Zephyr, the M&A database published by Bureau van Dijk, there have already been 30 cross-border deals within the utilities sector announced during 2017.

Back in March French water player Suez agreed to partner with Canada-based La Caisse de depot et placement du Quebec to acquire US-headquartered GE Water Technologies for USD 3.40 billion, in what has proven to be the largest such deal announced in the year to date.

This is followed by EDP Energias de Portugal upping its holding in Spanish wind power firm EDP Renovaveis from 77.5 per cent to 100.0 per cent for USD 1.45 billion. The deal still requires approval from CMVM, the Portuguese Securities Market Commission.

© Zephus Ltd