German power giant RWE unveiled a massive boost to its global renewables plans with an agreement to buy the US green energy business of Con Edison in a deal that values the latter at $6.8bn.
The purchase of Con Edison Clean Energy Businesses (CEB) will make RWE the number-four US renewables player, according to a statement announcing the deal to buy the New York-based operation.
Con Edison CEB has a 3GW operating base, 90% of it solar, and a 7GW pipeline. When added to RWE’s existing base, that gives the German group a 7.2GW operational presence and 24GW pipeline “perfectly balanced portfolio across onshore wind, solar and batteries”, it claimed, adding that it is also pursuing offshore wind plans in the US off New York and Maine.
The company in its statement hailed the recently passed Inflation Reduction Act (IRA) for setting a stable and reliable 10-year framework for investments in clean energy.
The acquisition of Con Edison CEB will be partly funded by a €2.428bn ($2.38bn) convertible bond that will see Qatar Investment Authority become a 9.09% shareholder in RWE.
RWE claimed the purchase is made at an “attractive price. Furthermore, with Ebitda [operating profit] of around $600m from year one on, the acquisition is earnings accretive”.
RWE CEO Markus Krebber said: “The unique combination of complementary portfolios in onshore wind, solar and batteries creates one of the leading renewable companies in the US market. The combined development pipeline, one of the largest in the US, provides tremendous opportunities for sustainable and value accretive growth, backed by a strong financial position.
“I am very pleased to welcome about 500 new colleagues. Together, we will form a powerful RWE team, strongly committed to contribute to the global energy transition.”
The deal is expected to close in the first half of 2023 subject to regulatory approvals.
The agreement has not met with universal applause in Germany, according to reports of criticism that RWE’s focus should be on its domestic market rather than vast international deals.
Reuters quoted activist RWE investor Enkraft Capital as describing it as “incomprehensible” that the huge M&A swoop was made "amidst the biggest energy crisis Germany has ever seen".
