UPDATE: E.ON To Sell Power Grid To TenneT For EUR1 Billion -Source
November 09 2009 - 2:01PM
Dow Jones News
E.ON AG's (EOAN.XE, EONGY) supervisory board has approved the
sale of the company's German power transmission grid to Dutch
electricity network operator TenneT Holding BV for around EUR1
billion, a person familiar with the matter told Dow Jones Newswires
Monday.
At a meeting earlier Monday, the German utility's supervisory
board agreed to sell the around 10,700-kilometer power transmission
grid as of Jan. 1, 2010, the person said.
"The price is slightly higher than EUR1 billion," the person
added.
This price would be in line with recent press reports, but is
considerably below analysts' estimates of the value of the
grid.
Citigroup, in a research note published earlier Monday,
estimated the E.ON grid to be worth around EUR1.6 billion.
The E.ON grid unit, called Transpower Stromuebertragungs GmbH,
employs around 700 people and generated around EUR6.2 billion in
revenue in 2008. The network stretches from Germany's North Sea
coast and the Danish border to the Alpine border of Austria in the
far south of Germany.
Under the terms of the deal, TenneT would be required to keep
the asset for at least five years, the person said.
E.ON and TenneT declined to comment.
E.ON last year committed to sell the electricity network in a
deal it struck with the European Commission, which had investigated
the company for alleged market abuse. The probe was subsequently
dropped in return for E.ON pledging to sell the grid.
The agreement between E.ON and TenneT comes more quickly than
many market observers had expected, given that the E.U. had granted
E.ON a two-year deadline to finalize the divestment. That deadline
would have expired in Nov. 2010.
The sale is also part of E.ON's plan to sell at least EUR10
billion worth of assets by the end of 2010 in an effort to lower
its debt pile--which it built up in an acquisitions spree over the
past two years--and refocus its business.
E.ON is the second power transmission grid operator in Germany
to sell its network.
Vattenfall Europe AG--the German unit of Sweden's state-owned
Vattenfall AB--is understood to have principally agreed to sell its
9,500-kilometer power grid to a consortium consisting of Goldman
Sachs Group Inc. (GS), Deutsche Bank AG's (DB) infrastructure fund
RREEF and Allianz SE (ALV.XE) for around EUR500 million and a
pledge the new owners will invest between EUR3 billion and EUR5
billion in the expansion of the grid.
Company Web site: www.eon.com
-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503;
jan.hromadko@dowjones.com
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