RWE, E.ON reshape German power sector in Innogy deal

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But this deal is also an attempt by the energy sector to survive, following the decision of the German Chancellor Angela Merkel to phase out its nuclear energy.

Peter Altmaier, the next economy minister and a close ally of Merkel, said the deal was a outcome of that shift, known as the "Energiewende" in German.

Assuming the deal goes through, and unites the large-scale renewables assets of Innogy and E.ON Climate & Renewables under the RWE umbrella, the operating asset base of the two will amount to about 6.35GW of onshore wind and 2.1GW offshore, plus a small but growing PV operation.

That would position RWE, which relies heavily on coal and gas-fired power plants, as a champion of the shift away from fossil fuels towards a more sustainable mix of energy sources.

Eon will receive RWE's 76.8% stake in Innogy.

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Eon is set to acquire Innogy from RWE, in a far-reaching asset swap that will see Eon concentrate on retail and networks, while RWE focuses on renewables and other forms of generation.

Following approval by the two firms' boards, the deal is expected to be signed shortly, E.ON said. In addition, RWE would get the minority stakes held at present by E.on subsidiary PreussenElektra in the RWE-operated nuclear power plants Gundremmingen and Emsland. Eon would transfer to RWE most of its renewables business and minority interests now held by Eon's subsidiary PreussenElektra in the RWE-operated nuclear power plants Emsland and Gundremmingen.

Should the prospective deal go ahead - the acquisition still needs to be approved by European Union regulators and the companies' respective boards - it would represent a significant shift for both organisations and the German energy sector more generally.

The European Commission declined to comment.

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