EnBW takes €2 bln stake in north German utility

Deals

German utility Energie Baden-Wuerttemberg agreed to buy a quarter of its peer EWE for €2 billion ($3.2 billion) in the biggest asset sale in the sector in Germany in five years.

EnBW, Germany’s third-largest energy provider, will be buying 26% of Odenburg-based EWE, if the German cartel office approves the takeover, EWE said on Thursday. “EWE and its communal shareholders decided today to enter into a strategic partnership with EnBW,” it said. EnBW’s expansion means that an existing player yet again gets a larger share of the German power market, which is already dominated by four large companies, namely E.ON, RWE and Vattenfall’s German unit, besides EnBW. It also marks an expansion for Electricite de France, Europe’s second-biggest utility, in Germany, through its 45% stake in EnBW.

EnBW won over Gaz de France, which had been one of the last two bidders for EWE and which has only small minority stakes in German companies so far, according to three sources familiar with the matter. GDF had bid 1.5 billion euros according to one person familiar with the matter, who declined to be identified.

EWE CEO Werner Brinker has been seeking a partner for more than a year as EWE’s northern German municipal owners look to sell the 26% stake they bought in 2003 from E.ON. Both companies, which are more than half owned by municipalities, had already discussed a cooperation but abandoned the talks, Brinker said last year. EWE, with sales of €4.7 billion and Germany’s fifth-largest utility, is owned by municipalities in northern Germany, which are organized in the Ems-Weser-Elbe Versorgungs- und Entsorgungsverband.

EnBW, which had sales of €14.7 billion in 2007, is owned by EDF and the OEW association of southern German municipalities, which hold 45% each. Some 1.7% of the company’s shares are freely traded. Part of the purchase are shares the municipalities are selling and part comes from new shares issued by EWE, the latter said, without giving more details. The company will hold a news conference tomorrow in Oldenburg. The sale would be the largest takeover in the German energy market since E.ON bought all of gas supplier Ruhrgas in 2003 for some €11 billion. (Reuters)

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