Eon has confirmed it does not expect “any material effect” on either the timing or delivery of the major asset swap between itself and RWE following the collapse of the proposed merger between Innogy’s UK retail arm Npower and SSE.
Concerns have been raised about job losses after reports that Npower staff were told before Christmas that they would be working for Eon upon completion of the complex wider European asset swap deal.
However a spokesperson for German-owned Eon told Utility Week that “no decisions” have been made.
They added: “At this point in time, we do not expect any material effect on either the timing or the delivery of the Innogy transaction.
“The closing of the transaction is expected not before mid-2019.”
Npower is owned by Innogy which is itself owned by RWE. Questions have been raised about the future of Npower following the news that the proposed merger with SSE had been scrapped.
The deal, which had been given the go ahead by the Competition and Markets Authority would have seen the big six energy suppliers reduced to the big five.
“Adverse developments” in the retail market and “regulatory interventions” such as the price cap have been cited as reasons behind the decision to call off the deal.
The larger German asset swap deal will see Eon obtain RWE’s 76.8 per cent stake in Innogy while RWE would receive Eon’s renewable energy business, plus Innogy’s renewables and gas storage businesses.
In August Eon revealed that “important milestones” had been reached in its transaction to acquire Innogy from RWE.
Eon could cut up to 5,000 jobs under the major asset swap deal with RWE.
The energy company is “seeking” to cut 500 jobs across its UK operations. Eon employs more than 9,400 people in the UK.
Speaking after the result of a voluntary public takeover offer to Innogy’s minority shareholders last summer Marc Spieker, Eon’s chief financial officer, said: “We want to and will work openly, transparently and fairly with Innogy to create together a new Eon that is fully customer-oriented with intelligent networks and innovative customer solutions.
“On the one hand, we will continue to leverage the synergy potential of €600 to €800 million and on the other hand, we will tap growth potential for the new Eon.”
A statement from Npower’s parent company issued in December said that Innogy SE and SSE plc stopped the negotiations on commercial adjustments for combining their retail businesses in Great Britain as announced in November 2017.
It added: “The reason for this is that the two parties could not agree on a joint solution for the necessary direct and indirect financial contributions.”
The firm said that since the third quarter of 2018, Innogy has accounted for Npower’s retail activities as “discontinued operations”.
As the retail business remains with Innogy for the time being, Npower will be accounted for as continued operations again, which requires adjustments on the group’s outlook for fiscal year 2018 as communicated in November last year, the company said.
Including Npower, Innogy now expects an adjusted earnings before interest and taxes (EBIT) of around €2.6 billion compared to €2.6 billion before on Innogy Group level and an adjusted net income of above €1 billion (before: above €1.1 billion).
For the retail division an adjusted EBIT of around €650 million (before: above €700 million) is now expected.
Martin Herrmann, chief operating officer retail of Innogy SE, said: “Adverse developments in the UK retail market and regulatory interventions such as the price cap have had a significant impact on the outlook for the planned retail company.
“We negotiated intensively with SSE on adjustments to the transaction as announced in November 2017. Unfortunately, we could not reach an agreement that was acceptable for both sides. We are now assessing the different options for our British retail business.”
SSE’s board is also exploring “other options” for SSE Energy Services including a standalone demerger, sale or an “alternative transaction”.
Work to separate SSE Energy Services from SSE plc will continue, while other options are considered, the company confirmed.
Alistair Phillips-Davies, chief executive of SSE plc, said: “SSE Energy Services remains a profitable business with a strong track record, a customer-centric culture and an excellent team that has enabled it to be a market-leader for many years.
“We will build on this while continuing with separation activity in preparation for its long-term future outside the SSE group.”