FRANKFURT/PARIS May 19 Germany's RWE and
France's Engie are studying with their investment banks alliance
options, one of which would involve RWE swapping part or all of
its majority stake in renewables and grids firm Innogy for a
minority stake in Engie, four investment banking sources said.
No active talks between the top executives of the two firms
are under way, but the two utilities are discussing options and
scenarios with advisers and bankers, the sources told Reuters.
At this stage, no banks have been given a formal mandate.
A French government source confirmed that talks are going
on, but declined to give detail. "There are indeed talks
ongoing, but that does not mean they will succeed," the
government source said.
An RWE-Engie deal could form the basis of a Franco-German
alliance in the field of energy, which has been under discussion
for years between the two governments. Any deal would have to
wait for German elections in September, the sources said.
One scenario would see RWE swap part or all of its 76.79
stake in its listed unit Innogy for a direct minority stake in
Bankers said the operation could only take the form of an
asset swap, not a cash deal, but a certain cash component could
be an option.
With Engie's market value at nearly 33 billion euros and
Innogy worth 18.6 billion, the 14.3 billion euro value of RWE's
Innogy stake could secure it a stake of about a third of the
A spokeswoman for Engie declined to comment but reiterated
that Chief Executive Isabelle Kocher said earlier this year that
Engie had no plans for a transformative deal.
Innogy and RWE declined to comment.
(Additional reporting by Tom Kaeckenhoff and Christoph Steitz
in Frankfurt and Emmanuel Jarry in Paris; editing by Andrew
Callus and Jason Neely)