Norway’s Statkraft acquires hydro in swap with Germany’s E.ON

Norway utility Statkraft will acquire 1,252 MW of hydropower, 700 MW of gas-fired power stations, and other assets as part of a 4.4 billion euro (US$6.25 billion) asset swap with German utility E.ON.

The agreement, announced October 12, gives E.ON full control of its Swedish unit, E.ON Sverige, while Statkraft receives a 2 percent stake in E.ON. With the additional hydropower from the trade, Statkraft will be one of Europe’s largest producers of power from renewable energy sources, Statkraft Chief Executive Baard Mikkelsen said.

The two companies signed a letter of intent under which E.ON will receive the 44.6 percent of E.ON Sverige owned by Statkraft. Statkraft receives power stations throughout Europe and the stake of more than 2 percent in E.ON, making it one of E.ON’s five largest shareholders.

The stake is a long-term “financial investment with a strategic importance”, Mikkelsen told Reuters.

Statkraft will get 934 MW of capacity in Swedish hydroelectric plants, a 220-MW pumped-storage project and 10 run-of-river hydro plants totaling 42 MW in Germany, two gas-fired plants of 700 MW in Germany, 56 MW of hydropower in the United Kingdom, and district heating plants in Sweden and Poland.

Mikkelsen said the transaction, supported by the Norwegian government, which owns 100 percent of the utility, would strengthen Statkraft’s core business and boost its renewable energy credentials.

“We will now be No. 1 with respect to renewables production in Europe — we will be at least at the level of EdF (Electricite de France),” he said.

The acquisition will give E.ON capacity of 6,400 MW, of which 40 percent is nuclear, 28 percent is hydroelectric, and the rest is oil, gas, and other renewable energy.

E.ON said it expects to close the deal by the third quarter of 2008, adding it would reduce adjusted earnings before interest and taxes — at 8.15 billion euros (US$11.5 billion) in 2006 — by 200 million euros (US$283.5 million) annually. The transaction will also increase taxes by 200 million euros in the year of the deal, it said.

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