France’s Engie is mulling a bid to take over RWE’s renewable business, Innogy.

Bloomberg reports that Engie hasn’t made a final decision to proceed. The deliberations are preliminary and may not lead to an offer, according to insiders. Representatives for Engie and Innogy declined to comment. RWE said on Tuesday that it “can in principle sell Innogy shares and thereby reduce its stake to 51 per cent.”

RWE owns about 77 per cent of Innogy’s shares after splitting the company off last year in a bid to adapt to difficult market conditions associated with the German government’s Energiewende push.
Innogy
In the event of a sale of Innogy, “RWE would have lots of money but no sustainable business model,” Erkan Aycicek, an analyst at Landesbank Baden-Wuerttemberg, told Bloomberg.

The utilities sector is likely to see “large, game-changing” mergers and acquisitions because of low borrowing costs and stronger balance sheets, according to a January report from Goldman Sachs Group, which advised RWE on the Innogy spin off.

Engie, part-owned by the French state, is also trying to shift away from fossil fuels. It plans to reinvest the €15bn it expects to raise from disposals to expand in energy services, renewable power and gas pipelines, where revenue is regulated or more predictable. It is bidding for renewable projects in the Middle East and predicts that solar power, battery storage and rising sales of electric vehicles will all weigh on demand for crude.

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