EON Shareholders Approve Breakup of Germany’s Biggest Utility

  • CEO Johannes Teyssen promises better prospects for EON, Uniper
  • Kley Succeeds Supervisory Board Chairman Wenning at meeting

EON SE Chief Executive Officer Johannes Teyssen won overwhelming support among shareholders for splitting up Germany’s largest utility in two to focus on renewable energy, networks and retail customers.

Investors voted by a majority of 99.7 percent, more than the 75 percent required, in favor of the spinoff of EON’s fossil-fuel plants and trading business into a separate company called Uniper at Wednesday’s annual general meeting in Essen. The company’s shares earlier rose to a four-month high as the European Central Bank started buying corporate utility bonds.

“We intend to undertake the largest transaction of Europe’s recent industrial industry,” Teyssen told shareholders before the vote. “The spinoff will give both companies better prospects for the future than they would have under our old setup.”

EON investors signed off on the breakup even as the utility contends with the uncertain cost of Germany’s exit from nuclear power, which may force it to postpone investment, cut spending and raise capital, Chief Financial Officer Michael Sen has said. Uniper, which started independent operations in January, plans to sell at least 2 billion euros ($2.3 billion) of assets and cut expenses after wholesale power prices fell to the lowest in more than a decade.

The split is the only way to “keep afloat” EON and Uniper in the next few years as utilities find their very existence under threat, Thomas Deser, a fund manager at Union Investment that holds EON shares, said at the meeting.

Shares Jump

EON, formed in 2000 from the merger of utilities Veba AG and Viag AG, plans to distribute 53 percent of Uniper’s shares to existing shareholders, giving one Uniper share for 10 EON shares, before eventually selling the remaining stake. The split cost 740 million euros, Teyssen told the meeting. Its stock rose 3.5 percent to 9.38 euros in Frankfurt, the highest close since Feb. 5.

Teyssen reiterated a forecast for combined underlying net income of 1.5 billion to 1.9 billion euros this year, with Uniper planning a dividend payout of 200 million euros.

It was the fifth and final meeting led by Werner Wenning, a former CEO of Bayer AG, who is leaving the utility’s supervisory board. His designated successor Karl-Ludwig Kley, the former chief of German drugmaker Merck KGaA, was elected by shareholders on Wednesday and then chosen to be the next chairman by its members.

RWE AG, EON’s main competitor in its home market, followed late last year with its own plan to separate its renewables, retail and grid business. It will only sell about 10 percent of the new company in an initial public offering this year. While more stakes may be sold, RWE intends to keep a majority.

Before it's here, it's on the Bloomberg Terminal.