E.ON establishes market position in Turkey

  • Enters Turkey’s attractive and growing energy market
  • Forges strategic partnership with the Sabancı Group
  • Swaps stakes in hydroelectric stations near the Bavarian-Austrian border with Verbund AG

E.ON SE, Düsseldorf, and Austria’s Vienna-based Verbund AG signed conclusive contracts for a substantial asset swap. E.ON will acquire Verbund’s share of EnerjiSA, giving it stakes in EnerjiSA’s power generation capacity and projects and power distribution business in Turkey. In return, E.ON will transfer its stakes in certain hydroelectric stations in Bavaria to Verbund.

Under the transaction, which is expected to close in the first quarter of 2013, E.ON will acquire 50 percent of EnerjiSA A.Ş., giving it a superb starting position in Turkey’s energy market. The other 50 percent are owned by Sabancı Holding, one of Turkey’s largest financial and industrial conglomerates, which is majority owned by the Sabancı family. Turkey is one of E.ON’s target growth regions outside its core markets in Europe. EnerjiSA’s current generation portfolio consists of gas-fired, hydro, and wind assets totaling nearly 1,700 megawatts of installed capacity. The company has 2,000 megawatts of capacity under construction and 1,500 megawatts under development. EnerjiSA also operates a power distribution business with about 3.5 million customers in the Başkent region. E.ON and Sabancı aim to have up to 8,000 megawatts of generating capacity in Turkey by 2020, giving them at least a 10-percent share of Turkey’s generation market.

“Following our entry into Brazil at the start of the year, our entry into the Turkish energy market represents significant progress in the implementation of our corporate strategy. Turkey has one of the fastest-growing economies in the world, and the rise in its energy demand has been strong and steady. This transaction gives us a superb platform for value-enhancing growth outside our markets in Europe. In Sabancı, we’ve found a partner that has unique market knowledge and goals that are as ambitious as ours,” E.ON SE CEO Johannes Teyssen said.

In return, Verbund will acquire E.ON’s interest in hydro capacity predominantly on the Inn River in Bavaria, in which it is already a joint owner. Verbund will acquire primarily E.ON’s stakes in Österreichisch-Bayerische Wasserkraft AG (ÖBK), Donaukraftwerk Jochenstein AG (DKJ), Grenzkraftwerke GmbH as well as Nussdorf, Ering-Frauenstein, and Egglfing-Obernberg run-of-river hydroelectric stations on the Inn along with procurement rights from Zemm-Ziller Hydroelectric Group. Altogether, these stakes and power stations represent 351 megawatts of attributable generating capacity.

Even after the planned transfer, E.ON will still have 2,300 megawatts of hydro capacity in Germany and remains a leading hydro operator there. After the asset swap is completed, E.ON’s hydro capacity will total roughly 6,000 megawatts.

The transaction is subject to approval, in particular by the European Commission, by Germany and Turkey’s antitrust agencies, and by EMRA, Turkey’s energy regulator.