German utility Innogy has reached two legally binding agreements with its parent RWE and rival E.ON to ensure the planned integration of its renewables business back into RWE and of the rest of its activities into E.ON will take account of employees' interests.

The deal comes after Innogy chief executive Uwe Tigges in May questioned the fairness of a wide-ranging transaction first announced in March with the aim of bundling E.ON and Innogy’s renewables business under the umbrella of a new RWE (which will also keep its fossil generation assets), while E.ON would focus on grids and customer solutions.

Past mergers and acquisitions among large publicly traded energy companies have often led to lay-offs and painful restructuring processes. While Innogy’s consent is not needed for the deal to proceed, its support is seen as helping smooth the process along.

“The agreements with E.ON and RWE lay the groundwork for a fair integration processes on equal terms and thus for constructive collaboration in the future,” Tigges now says.

“Considering the fact that Innogy is being taken over, we negotiated the best possible deal for our employees. The agreement is also in the interest of our customers, shareholders, and other stakeholders.”

E.ON in April launched the €4.9bn takeover offer for Innogy at €40 per share, following up on the March announcement of plans to acquire RWE’s 76.8% stake in Innogy in an attempt to gain critical mass in renewables – and improve its chances in ever more competitive renewables tenders world-wide.

E.ON and RWE’s Innogy unit’s installed wind, solar and hydro-power capacity now totals more than 8GW, while another 1.5GW of offshore wind is already under construction or firmly planned within the project pipeline.

The agreements now reached call for the planned transaction to be implemented in a transparent process in which all employees will be treated fairly and as equally as possible, regardless of which company they currently work for.

In addition, the integrations shall take into account the strengths of the respective companies. Essen will remain the registered office and headquarters of the new E.ON. Innogy promised it will play a positive role in supporting the swift implementation of the planned transaction between RWE and E.ON, also with respect to the capital market.

The three companies agree that working together early to plan integration measures is in the interest of their customers, employees, and shareholders.

“Our agreement with Innogy ensures Innogy’s support in obtaining timely regulatory approvals and a swift integration after the transaction closes,” E.ON chief executive Johannes Teyssen said.

“It’s a very important step towards creating a leading European energy company whose portfolio combining intelligent energy networks and highly innovative customer solutions will enable it to shape the energy future.”

RWE chief executive Martin Schulz was equally supportive: “With this transaction RWE becomes a broadly diversified power producer whose conventional generation business will be optimally complemented by a large renewables portfolio, linking the two with its existing trading platform.

“Dedicated and motivated employees are the key to RWE’s current and future success,” Schulz added.

“We will treat all employees equally and fairly, regardless of whether they currently belong to RWE, Innogy, or E.ON. Together, we will determine whether the transfer of the renewables business to RWE can be accelerated.”

Transition

Innogy agrees deals with RWE and E.ON to smooth integration