Another One Bites the Dust—Innogy Gone, nPower Next for E.ON?

Germany energy company E.ON recently announced that it had completed the buy-out of peer Innogy’s minority shareholders, marking the final step of the breakthrough asset swap with Innogy’s German parent firm RWE.


As a result, E.ON is expecting an imminent delisting of Innogy, which was once the leading energy group in Germany by market cap.


E.ON CEO Johannes Teyssen expressed the company’s plans of integrating every former Innogy operation into the group over the next few months while also prioritising the best interest of the customers.


Innogy bows out


Former Germany number one energy group Innogy will be delisted after E.ON, its new owner, has completed the squeeze-out of minority shareholders. This move is a portion of the broader deal that breaks up the firm after an asset swap between E.ON and the parent company RWE.


The buy-out marks the final step of the landmark deal to dismantle Innogy, which was first listed in October 2016.


The plan was announced two years ago when the two companies agreed on the terms of the asset swap. RWE agreed to take over the renewable operations of E.ON and Innogy, making it Europe’s third-largest renewable energy group and the second-largest in the world next to Orsted for offshore wind energy generation.


On the other hand, E.ON gained Innogy’s retail activities and networks, giving the company 51.5 million customers and a €33.2 billion regulated asset base across Europe, the highest among other rivals in the continent.


E.ON CEO Johannes Teyssen stated that the months following the delisting of Innogy would be focused on the integration of every former operation into the E.ON Group. Throughout the process, the company will be upholding the customer’s interest as its priority.

RWE head Rolf Martin Schmitz recognises the ever-increasing requirement to invest in technologies for them to operate internationally. He expects uncertainties in Europe’s energy industry, highlighting the need to specialise the model pushed forward by RWE and E.ON.


The final step of the asset swap will be RWE’s takeover of the Innogy gas storage and renewables business, and as well as acquiring a stake in Austria’s KELAG. The transaction is set to be finished by the end of June 2020.


Resolving Npower issues


After settling the Innogy buy-out terms and conditions, E.ON set its sights on resolving Npower’s problems. E.ON acquired the loss-making energy retailer since its parent company Innogy SE is part of the broader asset swap with RWE.


Teyssen called Npower an “open wound” that is bleeding heavily as a business. It is among the UK’s Big Six suppliers but saw revenue losses for consecutive years. E.ON has been looking at every option, including a sale, winding down, or a restructure of the company.


Npower’s woes have deepened further in recent months, which led to several job cuts and the closure of several branches and call centres. Its new owner is geared towards migrating customers to E.ON’s UK platform and restructuring the remainder of Npower’s operations.


The acquisition of Npower by E.ON has opened up the opportunity to ensure that a single platform can serve customers from both companies. This option was unavailable in the past, as the now-delisted Innogy was struggling to find ways of salvaging the bleeding losses of Npower.

Approval by the EC


The EC or European Commission signalled the approval of E.ON’s takeover of Innogy through a broader asset swap with parent company RWE.


E.ON is set to acquire 76.8% share, while RWE will take a 16.7% stake in E.ON.


The EC has given its nod based on several conditions. Firstly, E.ON is ordered to let go of some of Innogy’s divisions such as its gas and electricity business in the Czech Republic. It is also expected to drop its electricity retail enterprise in Hungary.


While it will not lose any network business, E.ON is bound to let go of about two million supply customers due to the measures set by the EC.