German utility E.ON announces major overhaul
Split into two separate companies signals focus on renewable energy.
German utility E.ON is to split its conventional and renewable power generation divisions into separate companies in a move aimed at adapting to fundamental changes in European energy markets.
Renewables-focused EON SE will have low volatility and tap growth potential from the transformation of the energy market, a statement said following a strategic review.
"E.ON's existing broad business model can no longer properly address these new challenges," CEO Johannes Teyssen said in a statement.
“These two missions are so fundamentally different that two separate, distinctly focused companies offer the best prospects for the future,” he added.
Conventional power generation has been hard hit in Europe, especially Germany, by the push for more renewable generation capacity aided by government subsidies.
E.ON confirmed the sale of it Spanish and Portuguese assets for EUR 2.5bn to Australia’s Macquarie Group and is considering hiving off its Italian assets. Upstream assets in the North Sea have also been placed under strategic review.
The decision comes as E.ON warned it expects to post a net loss this year because of its operations in southern Europe and its conventional generation assets.
The renewables-focused E.ON SE will employ 40,000 and the new company 20,000 people.