Innogy, which faces a break-up under plans recently unveiled by parent RWE and rival E.ON, on Monday announced fresh cost cuts in a bid to survive cut-throat competition in the energy market. The deal is expected to involve German and European antitrust regulators. Chief executive Peter Terium resigned late past year in the wake of a profit warning leaving Uwe Tigges as interim CEO.
Should the prospective deal go ahead - the acquisition still needs to be approved by European Union regulators and the companies' respective boards - it would represent a significant shift for both organisations and the German energy sector more generally.
The price for the company's stake in Innogy would be Euro 40 per share, including Euro 3.24 of dividends for 2017 and 2018, which RWE would still receive until the transaction is closed. Cash exchanged includes about €5 billion ($6.2 billion) for E.ON to buy out Innogy's minority shareholders, and RWE paying E.ON €1.5 billion ($1.85 billion), with the rest of the deal valued in shares and asset swaps.
"After successful implementation of the transaction it is meant to fully integrate innogy into the E.ON Group", E.ON said in a statement.More news: Taylor Swift dances like nobody's watching in her video for 'Delicate'
A source involved in the deal said it would be slightly more beneficial to E.ON, which would become a bigger regulated business by adding more networks, while RWE would end up owning interests in the riskier and more competitive renewables sector.
The aim is for E.ON to focus on the retail, energy networks and customer solutions business, while RWE would take over the renewables power generation of both companies.
Innogy reported a 3 percent rise in 2017 adjusted operating profit and said it would propose a dividend of 1.60 euros per share for 2017, unchanged from a year earlier.