E.ON and RAG Agree on Framework for Degussa disposal

12/19/05 | Posted in: Finance

Chance of a Special Dividend of EUR4.25 Per Share already in May 2006

E.ON AG, Düsseldorf, and RAG AG, Essen, today signed a framework agreement on the sale to RAG of the approx. 43 % participation still held by E.ON in Degussa.

The supervisory boards of E.ON and RAG today approved the agreement. The two companies agreed a purchase price of approx. EUR 2.8 billion. This corresponds to a value of EUR 31.50 per Degussa share. The transaction is to be completed by July 1, 2006. E.ON expects to record a book gain in the order of EUR 500 million from the transaction.

E.ON and RAG will bundle their Degussa participations in a joint venture company in early 2006 and continue to jointly manage Degussa until the transaction is completed. Ultimately, through a public acquisition offer and subsequent squeeze-out, this company should hold 100 % of Degussa.

The acquisition of the Degussa participation by RAG is still subject to the approval of the federal government and the state of North-Rhine Westphalia.

Dr. Wulf Bernotat, Chairman of the E.ON Board of Management, said: "We promised our shareholders in the spring to distribute the proceeds from the divestment of our stake in Degussa. With the conclusion of the framework agreement, we have taken the first step towards the sale of this participation. In addition, this agreement opens up the chance – depending on the progress of the negotiations – to propose to the annual shareholders meeting a payment of a special dividend of EUR4.25 per share already in May next year.