E.ON takes first step into U.S. renewables market
FRANKFURT (Reuters) - Germany's E.ON (EONG.DE: Quote, Profile, Research), the world's largest utility, is taking its first step into the U.S. market for renewable energy with the takeover of wind farms there for $1.4 billion including debt.
With the acquisition of the American division of Ireland's Airtricity, E.ON is buying current and future projects with a total capacity of more than 7,000 megawatts in the United States and Canada, the German company said in a statement on Thursday.
"E.ON is late in renewables, but it makes clear it's strongly committed to picking up," London-based UBS analyst Per Lekander said. "Valuations in the area are high and can only be justified by the expectation of future projects."
The takeover is Chief Executive Wulf Bernotat's largest acquisition in the area of renewable energy and first in the sector outside Europe, as countries worldwide seek to lower their dependence on ever-costlier fossil fuels.
E.ON said in August it bought wind parks in Spain and Portugal for 722 million euros ($1.02 billion) in one of its first takeovers in the sector.
The acquisitions complement the company's own projects in areas such as the North Sea.
The price includes $553 million in net debt and shareholder loans, E.ON said. The purchased division now operates wind farms with around 210 megawatts and another 880 megawatts will be installed by 2009, the company said.
Projects totaling more than 1,000 megawatts, which require $3.5 billion in investment, are in an advanced development stage, and plans for 5,000 megawatts -- including at locations in Canada -- are at an early development stage, E.ON said.
"It is a further step towards establishing a leading international position in the renewables business," E.ON said in the statement.
Airtricity said it would plough the proceeds of the sale of the unit into its European business, currently supplying more than 35,000 commercial customers.
In Europe, Airtricity operates wind farms in Ireland, Britain, the Netherlands and Germany and has plans to create a European "supergrid" of offshore wind power generators.
Airtricity has around 400 employees and had turnover of around 177 million euros last year.
© Reuters2007All rights reserved