RWE AG has agreed to pay $6.8 billion for Consolidated Edison Inc.’s renewable energy assets in one of the biggest green deals ever in the US, sparking criticism that the biggest utility German should instead concentrate on its national activities.
RWE has taken advantage of the turmoil in European electricity and gas markets since Russia waged war on Ukraine. The company raised its profit outlook for the year and earmarked up to 15 billion euros ($14.7 billion) for investments in the United States as part of its Growing Green strategy, which includes global spending of 50 billion euros by 2030.
The deal announced on Saturday will nearly double RWE’s renewable energy portfolio in the United States to more than 7 gigawatts. But an activist investor holding around 1 million RWE shares said the company should focus on supply and home security instead.
“It is completely incomprehensible that Germany’s biggest energy company could spend 7 billion euros on an M&A transaction in the United States in the midst of the biggest energy crisis Germany has ever seen,” Benedikt said. Enkraft Capital’s Kormaier in an email Sunday.
“Instead of siphoning off some of the windfall profits, it might have been more useful to force RWE to invest the profits in German energy infrastructure,” he said.
The financing of the Con Ed transaction will initially be provided by a bridge loan, which will be partly refinanced by a convertible bond to a subsidiary of the Qatar Investment Authority for an aggregate principal amount of 2.43 billion euros.
The deal “is a major boost for RWE’s green expansion into the United States, one of the most attractive and fastest growing markets for renewable energy,” said chief executive Markus Krebber. .
Con Edison, which provides electrical services in New York, parts of New Jersey and Pennsylvania as well as wholesale customers, has a market value of about $30.4 billion. The company announced in February that it was exploring strategic alternatives for the clean energy sector.
In a separate statement, Con Edison said it intended to scrap a previously announced plan to issue up to $850 million of common stock this year and to withdraw its 2023 stock guidance and 2024.
“The transaction we announced today will allow Con Edison to focus on our core utility businesses and the investments needed to lead New York’s ambitious clean energy transition,” said Con Edison CEO, Timothy Cawley.
Barclays was Con Edison’s financial advisor, while Latham & Watkins LLP was its legal advisor.
— With help from Walid Ahmed, Brian Eckhouse and Eyk Henning
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