Innogy Boards Air Concerns Over E.ON Takeover Offer

The Executive Board and the Supervisory Board of innogy SE have not issued any recommendations to innogy’s shareholders on the voluntary public takeover offer of E.ON Verwaltungs SE.

The decision follows an in-depth examination of the offer document, the boards said.

Under the agreement reached in March, E.ON is to take over RWE’s 76.79% stake in innogy, whereas RWE is to obtain among other things all of E.ON’s major renewable energy activities and innogy’s renewable energy business, as well as a 16.67% minority stake in E.ON.

On the basis of the information available and taking into account the fairness opinions of the investment banks involved, the boards regard the price per innogy share offered by E.ON to be fair in absolute terms. However, if the extensive exchange of business activities between E.ON and RWE are taken into consideration, the boards are not able to conclusively assess whether the offer price is fair for the minority shareholders, the statement said.

“Due to private agreements between E.ON and RWE, we aren’t able to conclusively assess whether the offer price altogether is fair,” said Uwe Tigges, Chief Executive Officer of innogy SE.

The boards also fear that innogy’s employees might suffer structural disadvantages compared with E.ON Group employees as part of an integration. Given these circumstances, the boards cannot support the transaction from the innogy employees’ point of view without additional safeguards in favour of employees.

“Irrespective of the offer price, we are extremely concerned that the job cuts planned by E.ON will be unilaterally pursued to the disadvantage of the innogy employees. There has been some movement in the talks with E.ON, especially in the last few days. However, we will measure the success of the negotiations solely by whether innogy’s employees obtain binding and reliable commitments for a fair integration process,” Tigges said.

The boards see the two companies as ”roughly of equal size in terms of market capitalisation, revenue and headcount”, and the company believes that there should be a legally binding agreement in place to ensure that the strengths of both companies are respected and that, where there are two people for one position, the most suitable employee ought to be chosen. The framework agreement should be monitored by an independent third party, the boards said.

The proposed timeline of the takeover is also one of the reasons for concern, the boards pointed out.

”According to the plans of E.ON and RWE, the potential transaction will not be closed until the end of 2019. That long period of time represents a considerable risk. E.ON thereby condones a situation where innogy’s employees will face uncertainty and qualified employees may leave the company in the time period until completion of the transaction,” the statement said.