Eon said it will focus on emerging energy innovations including renewables, distribution networks and customer solutions; while a new independent business, to be set up by 2016, will manage the group’s conventional power generation, energy trading an upstream activities.
The need to address these “fundamentally different” aspects of energy strategy mean that two “separate, distinctly focused companies” offer the best prospects for the future, said Eon chief executive Johannes Teyssen.
European utilities have come under persistent pressure over recent years as the deployment of subsidised renewable technologies undermines the profitability of conventional thermal generation.
Of the group’s increased focus on emerging technologies Teyssen said: “We are convinced that it’s necessary to respond to dramatically altered global energy markets, technical innovation, and more diverse customer expectations with a bold new beginning.”
But Teyssen added that the transformation of the energy system will continue to require reliable backup capacity as well as access to global markets for energy products.
“With a portfolio consisting of conventional power generation, global energy trading, and exploration and production, the new company will focus precisely on meeting these needs,” he said.
Eon said it will begin in 2015 to set up the public listing of the new company, which will be fully implemented by 2016. Although Eon will maintain a minority share of the company initially, in the medium term it intends to sell the shares, it said.
In addition Eon said it will divest its entire business in Spain and Portugal to Macquarie for an enterprise value of €2.5 billion.
The move came as little surprise to market analysts who have tracked the heavy toll that the changing market environment has taken on the company.
“We were sceptical of Eon’s previous ‘all in one’ diversification model, and we see this move as a positive step to ‘de-risk’ its business and refocus its operations,” an investor note from Investec said Monday morning.
“However, execution of this plan will be far from straightforward, in our view,” the investment bank added.