E.ON to split in two in major group restructuring

FRANKFURT: Germany's top utility E.ON SE announced plans on Sunday to split the company in two parts and spin off most of its power generation, energy trading and oil and gas businesses, responding to massive changes in the global energy sector.

E.ON said it wanted to focus on its renewable activities, distribution networks and customer businesses, responding to what it called "dramatically altered global energy markets".

"E.ON's existing broad business model can no longer properly address these new challenges," Chief Executive Johannes Teyssen said in a statement.

The company also said it would post a substantial net loss for 2014 due to additional impairment charges of about 4.5 billion euros ($5.60 billion) in the fourth quarter, citing its assets in southern European as well as loss-making power plants.

It said its supervisory board had also approved a proposal to pay out a dividend of 0.50 euros per share for 2014 and 2015, down from 0.60 euros paid for 2013.

E.ON said it would make preparation for the listing of the new company created by its breakup next year, with the spin-off taking place following its 2016 annual general meeting.

In a first step, E.ON said it would transfer a majority of the new company's capital stock to its shareholders, resulting in its deconsolidation.

E.ON also said it had agreed to sell its entire businesses in Spain in Portugal to Australian energy infrastructure investor Macquarie for 2.5 billion euros, adding it was also considering selling its business in Italy.

In addition, the group said it would conduct a strategic review of its exploration and production business in the North Sea.