Germany’s RWE to Acquire US’ Con Edison CEB at $6.8 Billion

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Germany-based global renewable energy development company RWE AG has said that it has signed a purchase agreement with Con Edison to acquire its Con Edison Clean Energy Businesses (Con CEB) that operates and develops renewable energy plants in the United States. It has 3 GW of operating capacity with 90 per cent in solar. Con Edison also has a strong development pipeline of more than 7 GW.

RWE said that after the acquisition, RWE will become the fourth largest renewable energy company in the US and its second largest solar operator.

Funding of Acquisition, Additional Growth 

RWE and Con Edison have agreed on a purchase price based on an enterprise value of $6.8 billion. At a multiple Enterprise Value/EBITDA of 11X, this represents an attractive price. Furthermore, with EBITDA of around $600 million from year one on, the acquisition is earnings accretive.

Financing of the acquisition and the additional growth are funded through debt instruments and an equity capital measure undertaken by RWE AG. Equity will be raised via issuance of a mandatory convertible bond to a subsidiary of Qatar Investment Authority.

Markus Krebber, CEO of RWE AG, said, “Our equity capital measure is the basis for financing the acquisition of Con Edison CEB and of the additional green growth in the years to come. I am delighted that QIA is supporting RWE’s accelerated growth ambitions with their capital commitment. This underlines our strategy to be one of leading drivers of the global energy transition.”

“The transaction we announced today will allow Con Edison to sharply focus on our core utility businesses and the investments needed to lead New York’s ambitious clean energy transition,” said Timothy P Cawley, Chairman and CEO of Con Edison.

Enhancing the Portfolio

RWE said that combining its and Con Edison CEB’s portfolios almost doubles RWE’s operating asset base in the US to 7.2 GW. At the same time, the presence of RWE in US becomes more widely spread across the vast majority of the states.

The company held that a combined project pipeline of more than 24 GW in onshore wind, solar and batteries provides one of the largest development platforms for renewable energy in the US. RWE is also expanding its global offshore wind activities. RWE said that it had already earmarked up to EUR 15 billion gross for investment in the USA as part of its Growing Green strategy, which envisages global investments of EUR 50 billion gross by 2030.

RWE’s Focus on US

RWE said that the US plays a key role in the company’s strategy to grow its renewables business and to become carbon neutral by 2040. It already has over 30 projects in operation in Texas, New York, Pennsylvania, North Carolina, Georgia, Ohio, Indiana, Illinois, Oklahoma and Arizona with a total installed generation capacity of 4.1 GW in onshore wind, solar and batteries.

Its also developing offshore wind in the United States. The company, together with its joint venture partner National Grid Ventures, secured area OCS-A 0539 in the New York Bight offshore lease auction in the U.S. with the potential to host 3 GW of capacity, enough to power 1.1 million U.S. homes.