Shrugging off recession and gloom, RWE, the
German electricity group, announced Monday a friendly cash bid of 9.3 billion
euros (12.5 billion dollars) for Dutch energy group Essent, dpa reported.
Like its rival E.ON, Essen-based RWE is now so big that it cannot expect
regulatory clearance to take over any other German utility, so it has had to
look abroad for merger targets.
Essent retails power in several EU nations including Germany itself.
A statement said RWE would gain 5.3 million new gas and electricity customers,
most in the Netherlands along with 250,000 of them in Belgium and 1 million in Germany. RWE will finance the deal with loans.
The takeover, which Essent said would forge the fourth-largest energy supplier
in Europe, could prove controversial, with some consumer groups, as well as
some competition watchdogs, already worried that the utilities are too big.
RWE said at the end of last year it was also looking for acquisitions in Britain, eastern Europe, the Balkans and Turkey.
RWE said in Essen it aimed to take over Essent's commercial activities in gas
and electricity. It said it would not acquire Essent's distribution network,
which will be put into new ownership under a European Union policy known as
unbundling.
Essent said that through a restructuring, its waste-disposal business would
also be excluded from the takeover.
Essent chief executive Michiel Boersma said: "Essent will now team up with
a leading and respected foreign partner."
The transaction would convert Arnhem-based Essent, which has a workforce of
7,800, into the RWE operating company in the Netherlands and Belgium, but RWE would retain the Essent brand.
An announcement said the two utility companies had already reached agreement on
the terms and conditions. Essent's top board supported it and recommended that
Essent's shareholders accept the offer.
The acquisition is the first for RWE since a new chief executive, Juergen
Grossmann, took over the Germany company in October 2007.
In a recent newspaper interview, Grossmann said the world financial crisis had
not affected RWE, but had made mergers cheaper.
"We can more today for the same money," he told the Sueddeutsche
Zeitung.
Essent's gas and electricity sales, excluding turnover by its grid and waste
management divisions, totalled 6.5 billion euros last year. RWE had sales
nearly seven times as large, of 43 billion euros.
RWE said the takeover would make it "one of the leading energy suppliers
in the Belgium, Netherlands and Luxembourg (Benelux) region."
Essent's strong business as a generator of energy from renewable sources - wind
and biomass - would help RWE's efforts to increase its renewables capacity to
4,500 megawatts by 2012, the statement said.
Both companies have also been experimenting with capturing carbon dioxide and
storing it underground.
Essent's principal shareholders at the moment are the Dutch provincial
administrations of Noord-Brabant, Limburg, Overijssel and Groningen and four
municipal groups.
RWE chief executive Grossmann called it "a successful and attractive
company with strong market positions in gas and in the power retail market in
the Netherlands and Belgium."
RWE already has a Dutch unit, RWE Energy Nederland, supplying gas and
electricity to 340,000 households and more than 50,000 businesses.
"Upon completion of the transaction, RWE will supply electricity to over
22.5 million customers and gas to approximately 12.5 million customers in Europe," the statement said.