German utility E.ON SE (ETR:EOAN) said today it had signed a deal to sell its 62.8% stake in regional unit E.ON Westfalen Weser AG to a consortium of municipal co-owners for some EUR360m (USD470.6m).
Under the terms of the deal, E.ON will buy back retail subsidiary E.ON WestfalenWeser Vertrieb GmbH and certain other shareholdings held by Westfalen Weser, it noted.
The disposal serves the company’s plan, unveiled in the middle of last year, to reorganise its regional utility operations in the country and focus on four regional utilities, namely, E.ON Avacon AG, E.ON Bayern AG, E.ON edis AG and E.ON Hanse AG.
The transaction is expected to be completed soon.
The target, which is based in Paderborn operates about 31,500 km (19,570 miles) of power lines and some 4,000 km of gas pipelines, as well as supplies drinking water and district heating. It has a staff of some 1,000.
Reuters earlier reported that E.ON was nearing a deal to sell its Westfalen Weser stake. It cited two members of the buying group of German municipalities, namely the German cities of Paderborn and Herford, which hold interests in the target.
German utility E.ON AG (ETR:EOAN) said it had agreed to sell its gas grid in Germany Open Grid Europe (OGE) to a consortium of Macquarie European Infrastructure Fund 4, Infinity Investments, British Columbia Investment Management Corp and Meag Munich Ergo for around EUR3.2bn (USD4bn).
E.ON said it would use the proceeds from this divestment to cut debt and invest in growth operations.
The group, which aims to raise some EUR15bn from disposals by 2013, said the sale of OGE brought it closer to that target. So far E.ON has sold assets worth over EUR12bn, it said.
OGE, the former gas transmission division of E.ON Ruhrgas AG, has been separated from the parent company in 2010 and established as an independent transmission operator in line with the European Union (EU) norms.
Now the firm operates the largest gas transmission system in Germany, serving as a key centre in Europe for shipments of bulk gas from Russia and Norway.
The Macquarie European Infrastructure Fund 4 of Australian banking group Macquarie Group Ltd (ASX:MQG) headed the buying consortium. Edward Beckley, head of Macquarie Infrastructure and Real Assets in Europe, commented that OGE was a very well run firm in a stable and regulated environment.
According to unnamed sources cited by Bloomberg, the buyers had resorted to nine banks to underwrite loans of over EUR2bn to help finance the deal.
E.ON said it expected to wrap up the sale in the third quarter of this year, pending clearance from the German Federal Cartel Office and the German Federal Ministry of Economics and Technology.