E.ON Splits Renewable from Conventional Energy Generation Business

E.ON will focus on renewables, distribution networks, and customer solutions and combine its conventional generation, global energy trading, and exploration and production businesses in a new, independent company (“New Company”), a majority of which will be spun off to E.ON SE shareholders. This new organizational setup is the logical consequence of the new strategy that the E.ON SE Supervisory Board decided on at its meeting yesterday.

E.ON Supervisory Board Chairman Werner Wenning said about the decision: “I’m pleased that the Supervisory Board unanimously approved the Board of Management’s proposed new strategy, which will give our employees and our investors clear prospects in two strong companies that are viable for the future.”

“We are convinced that it’s necessary to respond to dramatically altered global energy markets, technical innovation, and more diverse customer expectations with a bold new beginning. E.ON’s existing broad business model can no longer properly address these new challenges. Therefore, we want to set up our business significantly different. E.ON will tap the growth potential created by the transformation of the energy world. Alongside it we’re going to create a solid, independent company that will safeguard security of supply for the transformation. These two missions are so fundamentally different that two separate, distinctly focused companies offer the best prospects for the future,” E.ON SE CEO Johannes Teyssen said.

E.ON SE will focus on the new energy world and customer businesses. It will have three core businesses: renewables, distribution networks, and customer solutions. These businesses fit together and reinforce each other, creating a business portfolio with stable earnings and strong growth potential. About 40,000 employees will be assigned to the distinctly focused company, which, by concentrating on customers’ future needs, will ensure that employees have good development opportunities in a multinational energy corporation.

In its new setup E.ON will provide innovative solutions to meet the needs of its roughly 33 million customers. It will take new approaches to further developing each of its three core businesses. For this purpose E.ON will increase its investments already for the next year by about €0.5 billion compared to the previously planned 2015 capex of €4.3 billion. E.ON will place a particular emphasis on expanding its wind business in Europe and in other selected target markets. It will also strengthen its solar business. It will upgrade its energy distribution networks in its European markets and also in Turkey and make them smarter so that customers can take advantage of new products and services in areas like energy efficiency and distributed generation.

In 2015 E.ON will take necessary preparatory steps for the New Company’s public listing. Both E.ON and the New Company will be solidly financed, be positioned to secure jobs, and have prospects for creating new jobs in the future. “We firmly believe that creating two independent companies, each with a distinct profile and mission, is the best way to secure our employees’ jobs. Our new strategy therefore isn’t a job-cutting program,” Teyssen said.

The New Company’s business units do not yet constitute a corporation. In 2014 and 2015 E.ON will therefore take the necessary legal steps to combine these units. To ensure reporting continuity, E.ON’s current reporting units will, for the time being, remain unchanged.

The implementation of the new setup will be accompanied by certain costs and taxes, the details of which cannot be clarified until preparatory work is conducted in the year ahead. E.ON does not anticipate a lasting increase to its cost base, since new costs will be offset by the reduced requirements of the two companies’ simpler organizational setup.

E.ON expects to carry out the spinoff after approval by the E.ON Shareholders Meeting in 2016.

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Press release; Image: E.ON