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RWE mulls $21B deal
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October 21, 1999: 5:37 p.m. ET
German utility considering rival VEW to become Europe's largest
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NEW YORK (CNNfn) - German utility RWE AG said Thursday it is in talks to reclaim the top spot among Europe's publicly traded utilities with a multibillion-euro merger with rival VEW AG.
In the latest step toward consolidation in Europe's utility sector, the companies have set the value of a deal at 19 billion euros ($21 billion), the Wall Street Journal reported Thursday. RWE would offer one of its shares for every VEW share, the report said.
The boards agreed to start negotiations toward a shareholder vote by next summer. A merger would take effect retroactively, on Jan. 1, 2000, RWE said in a statement.
The deal would merge two Ruhr Valley rivals in a share swap and create a company with more than 43 billion euros ($46.4 billion) in annual revenue, the Journal said.
"The strategies of RWE and VEW complement each other in an excellent way," Dietmar Kuhnt, RWE's chief executive officer, said in a statement. "It is in the electricity and gas sectors, in particular, that we can draw fully on our combined strength."
RWE, which already owns 10 percent of VEW, was knocked out of first place in September, when domestic rivals Veba (FVEB) and Viag (FVIA) agreed to merge.
RWE shares closed 1.32 percent higher at 37.74 euros; VEW shares fell 2.9 percent to 337 euros.
Viag is looking to dispose of its 20 percent share in VEW, and RWE already possesses a 10 percent holding. Municipal authorities control at least one third of both RWE and VEW.
The deal would be merely the latest in a series of consolidation moves in the German utility sector. The liberalization of the country's electricity market early this year has left all the major players jockeying for position.
RWE recently decided to focus on its utility operations, and sell its stake in cellular operator E-Plus to France Telecom (PFTE).
-- from staff and wire reports
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