RWE AG agreed to pay $6.8 billion for Consolidated Edison Inc.’s renewable energy assets. in one of the largest green deals ever made in the US, prompting criticism that Germany’s biggest power company should focus on its domestic business.
RWE has benefited from turmoil in Europe’s energy and gas markets since Russia went to war in Ukraine. The company has raised its profit outlook for the year and earmarked up to 15 billion euros ($14.7 billion) for investments in the US as part of its Growing Green strategy, which envisages global spending of 50,000 million euros by 2030.
The deal announced Saturday will nearly double RWE’s renewable energy portfolio in the US to more than 7 gigawatts. But an activist investor with nearly 1 million RWE shares said the company should focus on supply and security at home.
“It is completely incomprehensible how Germany’s largest energy company can spend €7 billion on an M&A transaction in the US in the midst of the biggest energy crisis Germany has ever seen,” said Enkraft’s Benedikt Kormaier Capital in an email on Sunday.
“Instead of diverting some of the windfall, it might have been more useful to force RWE to invest the profits in German energy infrastructure,” he said.
Financing for the Con Ed deal will initially be provided by a bridge loan, which will be refinanced in part with a convertible bond to a subsidiary of Qatar Investment Authority with a total principal amount of €2.43 billion.
The deal “is an important boost for RWE’s green expansion in the US, one of the most attractive and fastest-growing markets for renewable energy,” CEO Markus Krebber said.
Con Edison, which provides electric service to New York, parts of New Jersey and Pennsylvania, as well as wholesale customers, has a market value of about $30.4 billion. The company announced in February that it was exploring strategic alternatives for the clean energy business.
In a separate statement, Con Edison said it intends to abandon a previously announced plan to issue up to $850 million of common equity this year and withdraw its capital guidance for 2023 and 2024.
“The transaction we announced today will allow Con Edison to focus on our core utility businesses and the investments needed to lead New York’s ambitious clean energy transition,” said Timothy Cawley, CEO by Con Edison.
Barclays was Con Edison’s financial advisor, while Latham & Watkins LLP was its legal advisor.
— With the assistance of Walid Ahmed, Brian Eckhouse and Eyk Henning
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