German RWE buys clean energy from Con Edison for US$6.8 billion
Germany’s largest power producer RWE has agreed to buy Con Edison’s clean energy businesses for $6.8 billion, nearly doubling RWE’s renewable energy portfolio in the United States, the world’s second largest renewable energy market.
The purchase will be partly funded by RWE issuing a $2.43 billion convertible bond to a unit of the Qatar Investment Authority, through which the QIA will become a 9.1% shareholder of RWE.
Con Edison said it is forgoing issuance of up to $850 million in new stock this year and withdrawing its equity forecast for the next two years. He said the deal would allow him to focus on his core utility business and New York’s clean energy shift.
The transaction will nearly double RWE’s US renewable energy portfolio to over 7 gigawatts (GW) and increase its portfolio of regional projects from 7 GW to over 24 GW.
After the takeover, solar will make up 40% of RWE’s U.S. portfolio, up from 3% currently, according to the presentation slides.
“Our equity metric is the basis for financing the Con Edison CEB acquisition and further green growth in the years to come,” said RWE chief executive Markus Krebber.
“I am delighted that QIA is supporting RWE’s accelerated growth ambitions with its capital commitment,” Krebber added in a statement released late Saturday.
The deal, which is expected to close in the first half of 2023, will make RWE the fourth-largest renewable energy player in the US market, which plays a key role in its green expansion, although it still lags far behind the biggest player NextEra. , which has some 58 GW of generating capacity.
RWE’s expansion into the United States comes as Germany battles the impact of a complete Russian gas supply shutdown, which has already triggered the nationalization of its smaller competitor Uniper.
Activist energy fund Enkraft Capital, which owns 0.15% of RWE, said it was “incomprehensible” that RWE could spend 7 billion euros on a merger and acquisition deal in the United States “in the midst of the biggest energy crisis that Germany has ever known”.
But QIA CEO Mansoor bin Ebrahim Al-Mahmoud said he was proud to support RWE’s efforts to become a global leader in renewables.
QIA’s investment expands Qatar’s relationship with Europe’s largest economy, which already includes stakes in Volkswagen, Deutsche Bank and Porsche.
The deal, the largest for RWE since the dissolution of the former Innogy division announced in 2018, will be immediately earnings accretive, providing RWE with additional base earnings (EBITDA) of $600 million per year.
This comes nearly a year after RWE fleshed out its global renewables roadmap, which includes 50 billion euros ($49 billion) in gross investment by 2030, of which 15 billion is earmarked for United States.
Con Edison CEO Timothy Cawley said RWE was “well positioned to accelerate the growth of renewable energy in the United States.”
Con Edison was advised on the deal by Barclays and Latham and Watkins.
RWE also confirmed its intention to pay a dividend of 0.90 euros per share for 2022.