German utility Eon expects to reduce its workforce by about 5000 people as a result of the proposed deal with RWE covering the assets of the latter’s renewables company Innogy.
RWE does not expect to make any job cuts following the conclusion of the agreement.
The deal announced yesterday would see RWE controlling the renewable generation assets of both Eon and RWE. Eon would end up with the retail and network businesses of Innogy and RWE.
The companies expect the transaction, which is subject to regulatory approval, to close by the end of next year and, until then, Eon, RWE and Innogy will remain separate businesses and competitors.
They added that the transfer of the renewables businesses to RWE will take place “as soon as possible” after the closing of the deal.
Under the terms of the proposal, Eon would acquire RWE’s entire 76.8% stake in Innogy, with RWE receiving 16.7% of Eon’s equity.
Eon chief executive Johannes Teyssen said: “This strategic exchange of businesses will create two highly focused companies that will shape a better future for Europe’s energy landscape.
“The new Eon will be able to intensify its efforts towards climate protection, for example through the faster roll-out of charging networks for e-mobility or the advancement and extension of smart grids in Europe.”
RWE chief executive Rolf Martin Schmitz said: “Renewable and conventional energy generation are two sides of the same coin when it comes to the transformation of the energy world.
“The expansion of CO2-free electricity generation will increasingly evolve from a regulated sector to a normal competitive market. Significant size is crucial for success in this future-orientated business.”