E.ON will shed around 5,000 jobs as part of its deal with RWE to take over the latter’s Innogy business.
Bloomberg reports that the transaction agreed with its rival values Innogy at $27.1bn and will sharpen the focus of Germany’s leading two electricity and natural gas providers, according to a joint statement on Monday. E.ON billed itself as the first formerly-integrated utility to focus entirely on meeting needs of 50 million customers across Europe. RWE said it doesn’t expect any net job losses.
E.ON would become a grid manager and power provider focused on meeting Chancellor Angela Merkel’s ambitious targets to cut pollution. For RWE, which is Europe’s biggest generator of electricity, the deal would provide it with renewables as an alternative to its current generation network that now is focused mainly on coal and nuclear power.
“It’s EON’s first real growth step for more than a decade,” EON Chief Executive Officer Johannes Teyssen said at a press conference on Tuesday in Essen, where all three of the utilities are based. “Our renewables businesses will find a promising home within a larger platform that will offer the necessary scale of size.”
RWE CEO Rolf Martin Schmitz said “size is crucial” to exploit business opportunities as clean energy subsidies disappear and that conventional power assets will become “the beating heart of any future-proofed industrial society.”
“The new RWE and EON entities provide investors with clearer differentiated opportunities,” Jonas Rooze, an analyst at Bloomberg New Energy Finance, wrote in a note to clients. “Investors can take stakes in RWE if they want power generation exposure, and in EON for distribution and retail exposure.”