The agreement between the German utilities will see E.ON acquire RWE’s 76.8% stake in innogy, following approval from the boards of each company.
In return, E.ON will grant RWE 16.7% of its own shares, transfer most of its renewables business and let go of the minority interests held by its subsidiary PreussenElektra in a number of RWE-operated nuclear power plants.
RWE would receive innogy’s renewables business, gas storage business and its stake in the Austrian energy supplier Kelag.
The transaction further provides for a cash payment from RWE to E.ON of €1.5 billion (£1.1bn).
E.ON aims to focus on energy networks and customer solutions while the renewables businesses of both firms would be brought together under the umbrella of RWE.