German utility EON to cut 5,000 jobs in RWE mega-deal
BERLIN: German utility EON said it plans 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 this weekend, “by the end of 2019”.
EON said it expects the Innogy takeover to generate some 600 to 800 million euros in savings annually from 2022, but warned that the “integration process” will lead to “a reduction of a maximum of 5,000 jobs” out of a total of around 70,000 jobs.
“At the same time, EON anticipates to create thousands of new jobs in the coming decade,” the statement added.
The ultimate 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 clean-energy spin-off at some 22 billion euros.
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 euros 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. — AFP