12 November 2002 - German multi-utility group E.ON is to merge three of its subsidiaries in North Germany, a spokesman for one of the affected units said Monday.

The merger will be effective from 1 January 2003 and will form a unit with ten billion kWh of annual sales

"The Hamelin-Pyrmont regional administration and E.ON signed an agreement declaring the co-operation was desirable and it was their intention to complete the move," a spokesman for Elektrizitaetswerk Wesertal in Lower Saxony state said.

According to the agreement, Wesertal will be merged with Herford-based EMR and Pesag of Paderborn, both to the west of Hamelin in Northrhine-Westphalia, into a company with the working title EPOS.

Selling power, gas, heat, water and waste handling services to 650 000 customers, the company will become one of the ten leading regional utilities in Germany.

E.ON, which has a declared strategy of merging small supply subsidiaries to form large regional entities, bought Wesertal from Finland's Fortum in April, when the Finnish company pulled out of German electricity sale and supply to raise finance for Swedish power sector acquisitions.

E.ON has a 54.51 per cent share in Pesag and owns just under 51 per cent in EMR. The two companies have adjacent supply grids.

A statement distributed by Wesertal said E.ON had given the regional government assurances that Hamelin would remain an important technical centre within the new firm's set-up and that its 280 jobs were safe for another two years.