Innogy soared 16 percent after parent RWE and rival E.ON said they would break up Germany's largest energy company by market value and divide up its assets.
German Economy Minister Brigitte Zypries said Monday the deal could make the domestic energy sector more competitive, signaling support for the agreement. "The sale will be performed via a wide-ranging exchange of business activities and participations". It would combine these with those of E.On, creating what RWE has termed a "leading European utility for renewables" with a "broadly diversified portfolio" of assets. Shares of GKN PLC rose almost 2% after Melrose increased its offer for the company to almost $11.24 billion. "RWE would not participate in this offer".
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After the transaction - which still needs to be approved by antitrust authorities - the renewables businesses of E.ON and RWE would be brought together under the umbrella of RWE, while E.ON would focus on power networks and customer solutions.
In a joint statement, E.ON said it reached an agreement in principle with RWE to acquire more than three quarters of the stakes in renewable energy entity Innogy, an offshoot from RWE. The company, which has a large onshore and offshore wind portfolio, expects an adjusted net income of over Euro 1.1 billion in 2018.
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The transaction is slated to be enacted in several steps and is subject to regulatory and board approvals.
In October past year, the company became the sole owner of the 860MW Triton Knoll wind farm in the United Kingdom after purchasing partner Statkraft's 50% stake in the project.
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Image: E.ON headquarters in Essen, Germany.