German utility E.ON plans sale of Italian business
FRANKFURT/MILAN (Reuters) - Germany utility E.ON (EONGn.DE: Quote) has started preparations for the sale of its Italian business and will soon begin the search for a buyer, four people familiar with the matter said, at a price likely to be about 3 billion euros ($4 billion).
Burdened by a massive expansion of renewable energy capacity, falling wholesale prices and tepid energy demand in Europe, E.ON embarked on a disposal plan that has already raised close to its target of about 20 billion euros.
"Goldman Sachs has been contacted to look into things (regarding the Italian sale), but it's early days yet," one of the sources said.
A banker working with a potential buyer told Reuters that he expects an auction to begin as early as January or February.
Apart from the Italian plan, E.ON aims to rake in at least 1.6 billion euros through the sale of German business E.ON Mitte and its stake in uranium enrichment company Urenco. E.ON and peer RWE (RWEG.DE: Quote) both own 16.7 percent of Urenco, with Britain and the Netherlands holding a third each.
E.ON's Italian plans were reported earlier by German paper Handelsblatt, which cited industry sources saying the business could be worth more than 2 billion euros.
A second source confirmed that Goldman Sachs is working on the file, adding that E.ON will not sell on the cheap.
"Three billion euros is about the right valuation. But E.ON has even higher book values and doesn't want large write-downs," the source said.
Goldman Sachs declined to comment. Continued...