E.ON reviews its energy strategy, spins off conventional power assets

German energy giant E.ON has unveiled a new strategy and has decided to focus on renewables, distribution networks, and customer solutions. Conventional power generation assets (nuclear, thermal and large hydro capacities), exploration and production activities and global energy trading will be combined in a new independent company, to be spun off and listed in 2015. E.ON will transfer a majority of the new company's capital to its shareholders, de-consolidating the company and divesting its remaining minority shares in the medium term. The new company will benefit from E.ON's efforts to optimise its generation fleet and production costs. It will also include E.ON's gas activities (exploration and production, transportation, storage and gas supply through long-term procurement contracts). E.ON expects to carry out the spinoff after approval by the E.ON Shareholders Meeting in 2016.

E.ON will raise its planned investments in its core businesses (renewables, distribution networks, and customer solutions) by €0.5bn, compared to a previous investment target of €4.3bn. The group will seek to expand its wind business in Europe and other key markets and to boost its solar business. E.ON will upgrade its energy distribution networks in Europe (including in Turkey) and invest in smart grids, energy efficiency and distributed generation.

E.ON has also announced the sale of its entire businesses in Spain and Portugal to the Australian fund Macquarie for €2.5bn. The transaction includes 4 GW of power capacity (from coal, gas and renewables), 650,000 electricity and gas customers and 32,000 km of electricity distribution network. The transaction is subject to the approval of the European Union competition authority. The transaction is expected to close in the first quarter of 2015.