EON: Innogy deal to lead to job cuts
BERLIN: German utility EON on Monday said it planned to cut up to 5,000 jobs as part of its takeover of the renewables unit Innogy from rival RWE, in a deal that will redraw the country’s energy landscape.
In a joint statement, EON and RWE said they planned to complete their asset swap transaction, which surprised investors when it was unveiled last weekend, “by the end of 2019”.
EON said it expected the Innogy takeover to generate some €600 to €800 million (RM2.89 billion to RM3.89 billion) in savings annually from 2022, but warned that the “integration process” would lead to “a reduction of a maximum of 5,000 jobs” out of around 70,000 jobs.
The goal of the transaction is to allow EON to focus on retail customers and on managing energy networks, essentially buying and selling electricity, while RWE will specialise in generating power from fossil fuels and renewables.
The complicated arrangement comes amid huge upheaval in the sector as Europe’s top economy switches from conventional to renewable power under the government’s so-called “Energiewende” or “energy transition”.
The deal would first see EON acquire RWE’s 76.8 per cent stake in Innogy, valuing the cleanenergy spin-off at some €22 billion.
Pending the green light from financial regulators, EON then intends to make a voluntary takeover offer to Innogy’s minority shareholders from “early May”, offering €40 per share.
RWE for its part would gain an effective participation of 16.67 per cent in EON — turning the one-time competitor into EON’s largest shareholder.
The next step of the deal would see RWE take control of EON’s renewables business, including Innogy’s renewables, its gas storage business, its stake in Austrian energy supplier Kelaq and EON’s minority stakes in two nuclear power plants.