Enel is in the frame to buy out RWE’s share in retail utility, Innogy.

According to City AM, RWE’s management is mulling the sale of its 76.8 per cent, €16.8bn stake, with a bad week for the company in the UK further motivating the move.Innogy

The company, spun off last year, took a hit following the UK government’s move to intervene in the energy market with a price cap: this month Innogy said the pressure on margins in Britain was “very high” as it booked a €480m impairment on Npower, which it owns.

Previously, RWE had said it would not sell its stake because of the steady dividend Innogy provides. However, Reuters reported the firm was still in the market for a sale of all or parts of the stake and that it had held talks with Enel.

RWE spokesperson, Lenka Zikmundova told Power Engineering International, “In general, there is no need to sell the 76.8 per cent stake, given the steady dividend we get from innogy.”  

“However, we have publicly said several times that RWE as a leading European utility is continuously in talks with many participants in the market about various topics and that we do not comment on market speculation.”

Meanwhile Enel,  Europe’s largest utility by market volume, said it routinely received pitches from investment banks, but that does not mean talks are underway.

Earlier this month, Francesco Starace, the boss of Enel, said the company was “doomed” to grow its core distribution business through mergers and acquisitions, which sparked market speculation. Starace had said before that big utility deals in Europe destroyed shareholder value.