EON SE hired Morgan Stanley to work with JPMorgan Chase & Co. in advising on a planned spinoff of the fossil-fuel business, two people familiar with the plan said, which analysts estimate could be worth $17 billion
Morgan Stanley will focus on advising the new company and JPMorgan will work with parent EON, one of the people said, asking not to be identified because the information is private. EON, Germany’s biggest utility, reached out to banks to seek other advisers for the transaction after picking JPMorgan last year, the people said.
EON on Nov. 30 announced plans to break itself up, spinning off fossil-fuel power plants into a separate company to focus on renewable energy. The reorganization is in response to Germany’s switch to wind and solar power, a shift that has forced nuclear reactors to close and undermined power prices, eroding the profitability of traditional utilities.
The new company may have a total enterprise value of 15.8 billion euros ($17 billion) and an equity value of 5.2 billion euros, analysts at Sanford C. Bernstein & Co. led by Deepa Venkateswaran said in a note dated March 25.
EON shares rose 3.9 percent to 14.28 euros Tuesday in Frankfurt trading.
The company will divest its stake in the fossil-fuel business within two years of spinning it off, one person familiar with the matter said last month. The unit will focus on conventional and hydropower generation, global energy trading, oil and gas exploration and production, and will include EON’s businesses in Russia and Brazil. That will leave EON focused on renewables, distribution and customer solutions.
Representatives for EON, Morgan Stanley and JPMorgan declined to comment.