More than two years after it was first announced, RWE AG and E.ON SE are finally closing the book on their €40 billion deal to reshape Germany's electricity sector.
RWE said July 1 that it completed the final step of its asset swap with E.ON, taking over the remaining activities of innogy SE, its former subsidiary that was at the center of the transaction.
The asset swap involved splitting up innogy to reincorporate its renewable energy assets into RWE, with E.ON taking on the remaining networks and energy supply businesses. E.ON's wind and solar power plants also passed to RWE under the deal, turning the latter into a pure-play power generator and energy trader.
"This is the day we have been working towards for two years. The new RWE has been completed," Rolf Martin Schmitz, RWE's CEO, said in a statement.
The final transaction in the swap, which was first announced in early March 2018, comes after a group of smaller power suppliers launched a legal case with the European General Court in a last-minute bid to annul the European Commission's approval of the deal, which they argue creates two "national champions" that will be able to corner the market.
As well as wind and solar projects, the innogy assets now transferred to RWE also include hydropower, biomass, biogas and gas storage activities, on top of a stake in Austrian electric utility KELAG Kärntner Elektrizitätswirtschafts AG. RWE already integrated E.ON's renewable energy business in the fall of 2019.
For its part, E.ON completed a squeeze-out of innogy's remaining minority shareholders in June, paying €42.82 per share before the company was delisted from the Frankfurt Stock Exchange — marking the end of Germany's third-largest utility. Innogy had been created in April 2016 when RWE spun out its renewables, network and retail operations into the subsidiary. It listed innogy's shares in October of that year.
E.ON CEO Johannes Teyssen said in June that the company will spend the coming months focusing on the practical integration of former innogy operations into the group. The company is still in the process of completing several divestments that were necessary to win approval for the asset swap from the European Commission, which had concerns around its effect on competition. E.ON won regulatory approval for selling its German heating power business to smaller rival LichtBlick SE in April.
With the renewable energy assets back in-house, RWE is now planning to spend about €5 billion on its clean energy business in Europe, North America and Asia-Pacific, with a view to growing its portfolio to 13 GW by 2022, the company said. As part of the now-completed takeover, RWE is also taking on 2,700 employees from innogy.
"We have a wonderful starting point: a huge worldwide renewables portfolio, two teams that complement each other perfectly with many years of experience, and a strong investment program," said Markus Krebber, RWE's CFO, who will take over leadership of the company from Schmitz in 2021.
Besides wind and solar power, RWE still owns a large share of coal and gas-powered generation, as well as lignite mines in Germany. The German government recently finalized its contract with the company to close all of its remaining coal plants by 2038 in line with the country's planned coal phaseout, which will see RWE receive €2.6 billion in compensation.
Although RWE has come under pressure from investors to move out of the fossil fuel more quickly, the company has so far remained steadfast in sticking to the government's timeline.