BERLIN: Germany utility EnBW (EBKG.DE) is close to striking a deal to expand its gas business with a roughly 1.5-billion-euro ($1.7 billion) asset swap as it seeks to offset falling profits at its power plants division, according to sources.
EnBW is in talks to acquire unlisted peer EWE’s [LANDWE.UL] 74.21 percent stake in gas group VNG [VNG.UL], aiming to pay the bulk of the purchase price with its 26 percent holding in EWE, said the three sources familiar with the deal.
The deal has not yet been signed off by the companies but could be announced as early as Friday, according to two of the sources.
It comes as German utilities, including EnBW, are suffering from falling profits at their power plant divisions, hit by the country’s decision to exit nuclear power by 2022 and a surge in renewables that is replacing coal and gas-fired capacity.
The deal will not involve much cash payments,” one source said, adding that the respective VNG and EWE stakes will each be valued at roughly 1.5 billion euros.
Shares in EnBW, Germany’s third-biggest utility, were up 2.9 percent at 1042 GMT.
VNG’s main business is running gas distribution grids – a type of asset that utilities are keen to snap up as they provide steady returns in times of low interest rates and weak wholesale electricity prices.
The deal would also allow EnBW, which operates mainly in the western German state of Baden-Wuerttemberg, to tap directly into gas supply in eastern Germany – where VNG is based.
