German multi-utility company, RWE AG, and Innogy, Britain’s biggest electricity supplier, have agreed the terms of a recommended offer to be made by RWE for all the common shares of Innogy. The offer will see the German firm become the UK’s largest supplier of power and water.
According to a statement, RWE will offer 275 pence per Innogy share and 2.750 pence per ADS (American depository share, where one Innogy ADS equals 10 Innogy shares) valuing the issued share capital of Innogy at £3.1 billion.
RWE estimates the net debt at the closing of the transaction to be £2.1 billion. Total enterprise value (including option movements) is reportedly £5.2 billion.
The equity value is said to represent a premium of 31 percent to the closing price of 210 pence per Innogy share on February 15, 2002, the last business day prior to the announcement by Innogy confirming that it had received approaches.
In light of the offer, the board of Innogy has decided not to distribute a dividend for the fiscal year to March 31, 2002.
RWE expects the transaction to be earnings per share accretive on a pre-goodwill basis in the first full year of consolidation.
Innogy is the UK’s leading integrated energy company with around 4.7 million electricity customers and some 1.9 million gas customers. Upon completion of the transaction, RWE will have approximately 20 million energy customers, further strengthening its position in the European sector.