A strong foundation

German utility RWE has agreed to buy Arnhem-based Essent for €9.3bn, making RWE one of the leading energy suppliers in the Benelux region.


German utility RWE has agreed to buy Arnhem-based Essent for €9.3bn (£8.4bn), making RWE one of the leading energy suppliers in the Benelux region.



The transaction will see RWE gain 5.3 million customers, of which 250,000 are based in Belgium and one million in Germany.


Across Europe, the RWE Group will have a total installed capacity of around 51GW.



RWE plans to invest more than €32bn in European energy markets over the next three years.


Once the agreement is complete, Essent will become RWE’s operating company in the Netherlands and Belgium and will continue to work as an independent entity within those markets.



The takeover excludes Essent’s electricity and gas distribution networks and waste management operations.


According to RWE, the deal represents a multiple of 9.6 times earnings before interest, taxes, depreciation and amortisation for 2009.



Essent operates an attractive power plant portfolio based on gas, renewables, coal and nuclear.


RWE hopes that Essent’s renewables business, with a particular focus on wind and biomass, will help boost its efforts to increase renewables capacity to 4,500MW by 2012.



The deal is also expected to increase Essent’s ability to invest in production capacity and secure long-term supply contracts.


The companies have a combined gas supply purchase volume of 53 bcm, allowing them to benefit from improved access to gas on competitive terms.



Juergen Grossmann, chief executive of RWE, said: ‘We are teaming up with a successful and attractive company, with strong market positions in gas and in the power retail market in the Netherlands and Belgium – markets that are very close to us, not just geographically but also culturally.


‘Essent’s track record in the renewables and trading business, its customer service activities including branding, and its expertise in the gas sector make it a perfect match for our company.’



Michiel Boersma, chief executive of Essent, said: ‘Essent will now team-up with a leading and respected foreign partner.


‘This opens a wide range of possibilities for our company, our employees and our customers.


‘In the current situation of a rapidly changing market, Essent partnering with RWE will create a strong foundation for the future.’



Subject to certain pre-completion conditions, the deal is scheduled for completion in the third quarter of 2009.