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RWE initiates acquisition of Netherlands-based energy utility Essent.
On January 12, 2009, RWE and the leading Dutch energy company Essent reached an agreement on a takeover offer. We agreed the conditions for a binding all-cash offer by RWE to the shareholders of Essent for the acquisition of all of the issued and outstanding shares in the company, which is headquartered in Arnhem. We will not take over Essent’s electricity and gas distribution grids and waste management operations. Including Essent’s net debt, the transaction is valued at €9.3 billion. Essent has 4.7 GW of generation capacity in the Netherlands, 0.1 GW of which is attributable to wind power plants, and supplies 3.9 million customers with electricity or gas. In addition, the company operates power stations with a combined installed capacity of 1.4 GW in Germany, of which 0.4 GW is accounted for by wind power, and 0.1 GW in Belgium. According to preliminary calculations, excluding the grid and waste management business, Essent earned some €6.6 billion in revenue in 2008. EBITDA Glossary achieved by these activities including income from investments was about €880 million for the financial year. We expect to realize annual synergies of about €100 million from 2014 onwards. We secured a €9 billion credit facility from a bank consortium to finance the transaction. Our purchase offer is subject to at least 80% of the issued and outstanding share capital of Essent being tendered to us. The acquisition requires antitrust clearance by the EU Commission. We expect to complete the takeover in the third quarter of 2009.
Joint venture for the construction of nuclear power stations in the UK.
In January, RWE and E.ON formed a joint venture to build nuclear power plants in the United Kingdom. The 50:50 joint venture will aim to purchase sites being sold by the Nuclear Decommissioning Authority (NDA) at Bradwell, Oldbury and Wylfa. The joint venture will develop nuclear power plant projects and carry out the construction and operation of the facilities. Our goal is to build at least 6 GW of nuclear generation capacity in the UK together with E.ON. The size of the investment will in part depend on the number of sites obtained during the NDA sales procedure.
Strengthening of position in Luxembourg.
RWE will take a share in the integrated national electricity and gas company that the Grand Duchy of Luxembourg is currently in the process of creating. This was contractually agreed at the end of January. RWE Energy will contribute its stake in the Luxembourg power utility Cegedel to the new company and hold a 19.8% interest in it in the future. The activities of Cegedel, Soteg and Saar Ferngas will be combined in the new entity. Previously, RWE Energy, together with the holding company Luxempart, held a 30% stake in Cegedel. We have since taken over Luxempart’s interest. The purchase price amounted to €186 million.
Increased organizational independence of the electricity transmission network.
We will assign RWE Transportnetz Strom GmbH (an RWE Energy subsidiary until then) directly to RWE AG retrospectively as of January 1, 2009. The reclassification is scheduled for the first half of the year. It represents a step towards preparing for the “Third Liberalization Package” of the European energy ministers, which, among other things, aims to strengthen the autonomy of transmission system and long-distance grid operators within integrated energy companies.
UK energy minister approves gas power plant in Pembroke.
In early February, the UK energy minister gave us the final go-ahead for the construction of the combined-cycle gas turbine power station in Pembroke, Wales. The plant will consist of five units with a combined installed capacity of 2 GW. The site is in the immediate vicinity of LNG Glossary terminals and provides the option of direct sea water cooling. Construction work is scheduled to begin in the spring. If the project progresses as planned, the power station will be commissioned in 2012 and achieve an efficiency Glossary of 59%. Based on our estimates, the capex budget will amount to €1.2 billion.
