April 9, 2001—Dusseldorf-based utility E.ON AG today announced that it has made an agreed offer to acquire the British utility Powergen plc in a deal which values Powergen at £9.6bn ($16.9bn). The acquisition had been anticipated as E.ON had confirmed talks were in progress back in January.

E.ON is offering 765p per share to the shareholders of Powergen, which represents a premium of 8.4 per cent on the closing price of last Friday. The acquisition of Powergen will give E.ON a stronger pan-European position in the provision of energy services as well as access to the world’s biggest energy market: the United States. The £9.6bn purchase includes £4.5bn of debt.

Ulrich Hartmann, the CEO of E.ON stated that, “The price of 765 pence per share which we have offered to Powergen’s shareholders is a fair price”. He added that, “This valuation is more or less in line with current trading multiples of British and European utilities, but below the multiples of recent utility transactions in the UK and Spain”.

Powergen’s Chairman, Ed Wallis, was also positive about the offer adding, “I am convinced that this is an excellent deal for our shareholders, employees and customers, as well as for E.ON. For this reason the board is unanimously recommending it.”

With the purchase of Powergen, E.ON will become the world’s second largest energy service provider. The company is likely to make further acquisitions as it pursues its intention of focussing on its core energy businesses. Further expansion will be financed by the divestment of certain non-core businesses following an extensive restructuring programme.

The issue of debt had become an important factor for Powergen following its purchase of LG&E Energy, a vertically integrated energy group based in Louisville, Kentucky. By joining forces with E.ON, Powergen will also benefit from an enhanced global presence.

E.ON will need to clear regulatory hurdles both in the UK and United States as well as with the EU Commission. It is anticipated that the transaction will be completed by spring 2002.

With the addition of Powergen, E.ON will, in future, serve 30m electricity and gas customers. The inclusion of LG&E in the US furthers E.ON’s stated goal, to achieve a leading position in the United States energy market.