RWE and Engie poised for giant EU power merger

German utility RWE and France’s Engie are deliberating the possibility of a $55.8bn merger that would create a European giant in power grids, renewables and energy services.

Reuters reports that none of the parties are commenting on the matter, however an unnamed French government source confirmed that talks were indeed taking place.

Options being looked at could involve RWE swapping part or all of its majority stake in renewable energy and grids firm Innogy (IGY.DE) in exchange for a minority stake in Engie, four investment banking sources said.

"There are indeed talks ongoing, but that does not mean they will succeed," the source said.

The talks may gain momentum after the conclusion of the German general election in September.

Shares in the three companies jumped on the news, with RWE (RWEG.DE) rising more than five percent, making it the top gainer in the Dax index.

One scenario that has emerged would see RWE swap part or all of its 76.79 stake in its listed unit Innogy for a direct minority stake in Engie.

The move would also be in line with Engie's CEO Isabelle Kocher’s push for a strategy shift to focus the former French monopoly gas utility more into grids and renewables.



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