RWE Set to Take Over UK's Innogy for 8.2 Billion Euros
March 22, 2002
Utility RWE AG plans on Friday to complete the acquisition of British electricity and gas concern Innogy, people familiar with the situation told Handelsblatt.
These people said RWE's supervisory board was informed of the group's intention on Wednesday. They said RWE is paying almost 5 billion euros for the British group, and with the assumption of debt, the whole deal is worth 8.2 billion euros.
Analysts in London said the move was a positive one for RWE. They said the group was now clearly positioned on the British market, and further acquisitions were not to be expected.
Last year, RWE acquired water utility Thames Water, which has ten million customers. Now it is following that up with Innogy, which, with 7 million customers, is Britain's leading power supplier and its number-two gas supplier.
RWE is thus fully pursuing its multi-utility strategy – offering water, gas and electricity – on the British market. According to analysts, the synergies unleashed by the Innogy deal justify the high price it is paying.
The price RWE is paying for each Innogy share works out at 270–275 pence, ten times the earnings before interest, taxes, depreciations and amortizations per share.
Competitor E.On, for example, paid just nine times the ebitda per share for UK power utility Powergen.