Germany’s RWE buys Con Edison clean energy in $6.8 billion U.S. shift

FRANKFURT, Oct 2 (Reuters) – Germany’s largest energy producer RWE (RWEG.DE) has agreed to purchase Con Edison’s (ED.N) Clear Power Companies for $6.8 billion, practically doubling RWE’s renewables portfolio in the US, the world’s second-biggest renewables market.

The acquisition can be partly funded by RWE issuing a $2.43 billion convertible bond to a Qatar Funding Authority unit, by means of which the QIA will turn into a 9.1% shareholder in RWE.

Con Edison stated it was scrapping plans to problem as much as $850 million in new shares this yr and withdrawing fairness steerage for the following two years. It stated the deal would permit it to concentrate on its core utility enterprise and New York’s clear power shift.

The transaction will practically double RWE’s U.S. renewables portfolio to greater than 7 gigawatts (GW) and develop its regional undertaking pipeline by 7 GW to greater than 24 GW.

After the takeover, photo voltaic will account for 40% of RWE’s U.S. portfolio, up from 3% now, presentation slides confirmed.

“Our fairness capital measure is the idea for financing the acquisition of Con Edison CEB and of the extra inexperienced progress within the years to come back,” RWE Chief Government Markus Krebber stated.

“I’m delighted that QIA is supporting RWE’s accelerated progress ambitions with their capital dedication,” Krebber added in a press release launched late on Saturday.

The deal, which is predicted to shut within the first half of 2023, will make RWE the fourth-largest renewables participant within the U.S. market, which performs a key function in its inexperienced enlargement, although nonetheless far behind largest participant NextEra (NEE.N), which has some 58 GW of producing capability.

U.S. EXPANSION

RWE’s enlargement in the US comes as Germany is battling the impression of an entire halt in Russian fuel provides, which has already triggered the nationalisation of its smaller competitor Uniper (UN01.DE).

Activist power fund Enkraft Capital, which owns 0.15% of RWE, stated it was “incomprehensible” how RWE may spend 7 billion euros on an M&A deal within the U.S. “amidst the largest power disaster Germany has ever seen”.

However QIA CEO Mansoor bin Ebrahim Al-Mahmoud stated it was proud to help RWE’s efforts to turn into a world renewables chief.

QIA’s funding expands Qatar’s relationship with Europe’s largest financial system, which already contains stakes in Volkswagen (VOWG_p.DE), Deutsche Financial institution (DBKGn.DE) and Porsche .

The deal, the largest for RWE for the reason that break-up of former division Innogy introduced in 2018, can be earnings accretive straight away, giving RWE extra core earnings (EBITDA) of $600 million a yr.

It comes practically a yr after RWE fleshed out its international renewables roadmap, which incorporates 50 billion euros ($49 billion) of gross investments by 2030, with 15 billion earmarked for the US.

Con Edison CEO Timothy Cawley stated RWE was “well-positioned to speed up the expansion of renewable power throughout the US.”

Con Edison was suggested on the deal by Barclays and Latham and Watkins.

RWE additionally confirmed plans to pay a dividend of 0.90 euro per share for 2022.

Further reporting by Rhea Binoy in Bengaluru; Enhancing by Jonathan Oatis, Kirsten Donovan and Alexander Smith

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