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E.ON close to selling Open Grid

by Andrew Bulkeley in Berlin | Published May 2, 2012 at 10:28 AM

Germany's E.ON AG expects to announce the sale of its Open Grid Europe GmbH German gas pipeline this month and may extend a two-year-old, €15 billion divestment program to include other units to focus on growing markets, the company's CFO said in a newspaper interview.

The Open Grid sale could bring as much as €3 billion ($4 billion). E.ON company has also received initial bids for its E.ON Energy From Waste trash unit and regional utility E.ON Westfalen Weser, CFO Marcus Schenk said in Börsen Zeitung. The comments were confirmed by the utility, which refused to comment on advisers.

In November 2010, six months after he took over as E.ON CEO, Johannes Teyssen unveiled a sweeping divestment program to move outside mature European markets, exit peripheral activities and raise €15 billion in unnamed assets by 2013. That followed a 2009 announcement by Dusseldorf-based E.ON to divest some $12.8 billion in assets. It sold its electricity transmission network to Dutch TenneT BSO NV and its utility business in Kentucky.

"Our portfolio still has assets that don't fit with our other businesses. We're still to diversified," Schenk told Börsen Zeitung.

The executive refused to comment on bidders for the pipeline but news reports have said three groups of investors are still interested. The first group couples a fund of Australian infrastructure investor Macquarie Bank Ltd. with France's GDF Suez SA and insurer CNP Assurances SA. The second consortium reportedly includes Belgium gas transportation specialist Fluxys SA, New York's Global Infrastructure Partners and fund manager Caisse de depot et placement du Quebec.

The third bidder for the 12,000 kilometer network (7,500 miles) is a consortium of Germany's Allianz SE, Canadian Pension Plan Investment Board and Dutch gas grid operator NV Nederlandse Gasunie, according to Reuters. The final consortium includes Australia's Macquarie Bank, Abu Dhabi Investment Authority and British Columbia Investment Management Corp. are in the running.

E.ON had hoped to bring in up to €2 billion with the Energy From Waste trash unit but bids have only reached €1.5 billion, according to DPA-AFX. Reportedly bidding at regional utility MVV Energie AG, of Mannheim, Germany, waste company Remondis AG & Co. KG and construction company GP Günter Papenburg AG.

"We would like to have 25% of our business activities outside Europe. We should be able to achieve this goal this decade," Schenk said.

The divestment push received fresh impetus last year when German chancellor Angela Merkel promised to end nuclear power generation in Germany by 2022, after earlier undoing a previous administration's similar attempt. Merkel was responding to the Germany public's fears following the Fukushima disaster.

So far it has sold its U.K. electricity grid to PPL Corp. for £4 billion ($6.5 billion) and an Italian gas grid to Italian infrastructure investor Fondi Italiani per le Infrastrutture SGR SpA and French investor AXA Private Equity for €290 million including debt. It also sold a 3.5% OAO Gazprom stake for €3.5 billion, both on the market and to Russian reconstruction bank Vnesheconombank, or VEB.

To help offset the loss of its atomic generation capacity and expand outside Germany, E.ON early this year paid 850 million reais ($444.7 million) for 10% of Brazilian rival MPX Energia SA to expand in South America's biggest market. The companies then launched a 50-50 joint venture to produce 20,000 megawatts of electricity in Brazil and Chile.

The Dusseldorf-based company, which is holding its annual general meeting Thursday, on Wednesday said first-quarter net income rose 30% to €1.7 billion.

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Tags: Börsen Zeitung | E.ON AG | Marcus Schenk | Open Grid Europe GmbH | Westfalen Weser

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