Germany's RWE buys Con Edison's renewable portfolio for $6.8 billion

Germany's largest power producer RWE AG (OTC:RWEOY) has agreed to buy Con Edison Inc's Clean Energy Businesses subsidiary for $6.8 billion, doubling its share of the world's second largest renewable energy market.

The deal will be partly financed by $2.43 billion of convertible bonds issued to a unit of the Qatar Investment Authority (QIA), giving the fund a 9.1% stake in RWE. Con Edison said it had canceled plans to issue up to $850 million in new shares this year and scaled back its equity expectations for the next two years. Con Edison said the deal would allow it to focus on its core utility business and New York's clean energy transformation. The transaction will nearly double RWE's US renewable energy portfolio to over 7 gigawatts (GW) and increase its regional project pipeline by 7 GW to over 24 GW. According to the presentation slides, solar power will increase from 3% to 40% of RWE's US portfolio following the acquisition. "Our equity measure underpins the financing of the acquisition of Con Edison CEB and additional green growth in the coming years," RWE Chief Executive Markus Krebber said in a statement late on Saturday. "I am very pleased that QIA is supporting RWE's accelerated growth ambitions with its capital commitment." The transaction, expected to close in the first half of 2023, will make RWE the fourth-largest renewable energy player in the US market, which will play a key role in the company's green growth, but will still leave it far behind the largest player NextEra, which has about 58 GW of generation capacity. QIA CEO Mansoor bin Ebrahim Al-Mahmoud said the fund is proud to support RWE in its efforts to become a global renewable energy leader. QIA's investment in RWE expands Qatar's relationship with Europe's largest economy, which includes stakes in Volkswagen (ETR:VOWG_p), Deutsche Bank (ETR:DBKGn) and Porsche. The deal, the largest for RWE since the break-up of the former Innogy announced in 2018, will be immediately accretive, providing RWE with additional core earnings (EBITDA) of $600 million per year. The deal comes nearly a year after RWE unveiled its global renewable energy roadmap, which includes a gross investment of 50 billion euros ($49 billion) by 2030, with $15 billion earmarked for the US. Con Edison CEO Timothy Cawley said RWE "is well positioned to accelerate the growth of renewable energy in the United States." Barclays (LON:BARC) and Latham and Watkins advised Con Edison on the deal. RWE, which confirmed plans to pay a dividend of 0.90 euros per share in 2022, will primarily strengthen its solar portfolio and pipeline in the US as part of the deal. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!