9 July 2002 – Germany multi-uility E.ON said it expected to realise around €3bn ($2.96bn) from the divestment of assets it is required to undertake as part of the terms under which it may acquire leading gas distributor Ruhrgas.
“We expect to see in the area of round about €3bn,” Hans Michael Gaul, management board member in charge of mergers and acquisitions, told analysts in a conference call. Analysts regard the conditions as tough but that disposals would not dilute the strategic sense of the deal which E.ON paid &euro10.4bn to pull off.
Weekend speculation centred on the possibility of E.ON making an approach for UK power company Scottish and Southern Energy (SSE), one of only two remaining independent UK regional power utilities. Scottish and Southern shares rose more than two per cent after The Observer newspaper reported that E.ON was considering a £7bn bid for SSE.
E.ON is expected to use its Kentucky-based utility LG&E as a springboard into the lucrative US power market, and analysts expect it to bid up to €10bn for a US electricity player in the coming months.
“In the foreseeable future, there will be no decision (on acquisitions) at all,” Hartmann said.
Meanwhile, interest is growing in the assets E.ON must sell. Gaz de France and Vattenfall Europe said on Monday they were looking at stakes in eastern German gas firm VNG, which E.ON and Ruhrgas have to sell as part of merger conditions.
Leading Dutch utility Essent also expressed an interest in certain assets including a 51 per cent stake in Bremen city utility SWB AG and buying north-eastern regional utility EWE AG of Oldenburg.
“We are interested in these E.ON and Ruhrgas assets, because they are geographically close to Essent’s base and Germany’s gas market is among the more liberalised in Europe,” he said.
“We have also criticised that we find the merger conditions too mild and asked whether foreign companies will get a fair chance to buy the assets E.ON and Ruhrgas must shed.”
Bremen and Oldenburg are next door to the Netherlands and are strategically most important to the Dutch.