German energy provider E.ON makes buyout offer to remaining shareholders in Innogy break-up

BERLIN, April. 27 (Xinhua) -- The German energy provider E.ON made a formal offer to remaining minority shareholders in its planned acquisition of the RWE-subsidiary Innogy on Friday.

RWE published an official takeover bid shortly after receiving an approval to do so from Federal Agency for Financial Services Supervision (Bafin). Earlier, the Essen-based energy sector firm reached a widely-publicized agreement with rival RWE to acquire its 76.8 percent stake in the renewable energy provider Innogy.

The deal would witness E.ON's takeover of Innogy's lucrative grid business, while renewable energy generation became concentrated under the corporate umbrella of the RWE. As a consequence, the only two-year-old subsidiary Innogy would cease to exist.

The deal worth around 20 billion euros (24.2 billion U.S. dollars) has largely been welcomed by policymakers and trade unions as an example of positive corporate restructuring. In order to complete the transaction, however, E.ON must also persuade the investors holding the remaining 23.2 percent of Innogy shares to sell their stocks as well.

E.ON revealed that it is offering investors 38.4 euros per share, more than the current market rate of 37.65 euros per share. Nevertheless, it remains unclear whether minority shareholders will accept the offer after signalling their disappointment with plans to break-up Innogy at a recent Annual General Meeting (AGM).

Innogy was well progressed on the path to independence. Now the company is being betrayed, sold, and robbed of its future", Thomas Hechtfischer, director of the German Society for the Protection of Securities Holders (DSW) complained. Hechtfischer urged shareholders to reject E.ON's first bid, being confident that a second and better offer would be given.

Innogy chief executive officer Uwe Tigges has stated that he is less than enthusiastic about his company's looming break-up. "The fact is: Innogy today is an economically-independent and strong energy company," Tigges said. Given that there was virtually no chance to avert the sale due to RWE's controlling stake in Innogy, however, the CEO had no choice but to "focus on what we can influence" and "approach the challenges we face with confidence."

The minority shareholders now have until early July to accept the offer. If successful, the corporate restructuring process resulting from the E.ON-RWE deal would make E.ON one of Europe's largest energy corporations in the areas of sales and grid operation.

The Essen-based has announced plans to eventually ensure supply to 50 million customers along a grid running to a total of 1.5 million km in length. Enditem