Germany's largest power producer RWE has agreed to buy U.S. Con Edison Clean Energy Businesses for $6.8 billion, nearly doubling RWE's renewable energy portfolio in the United States, the world's second-largest renewable energy market, Reuters reported.
The purchase will be financed in part by RWE's $2.43 billion convertible bond issue to Qatar Investment Authority, through which QIA will become a 9.1 percent shareholder in RWE.
Con Edison said it is abandoning plans to issue up to $850 million in new shares this year and is withdrawing its placement recommendations for the next two years. The company said the deal will allow it to focus on its core business of utilities and clean energy development in New York City.
The deal will nearly double RWE's U.S. renewable energy portfolio to more than 7 gigawatts (GW) and increase its regional portfolio by 7 GW to more than 24 GW.
After the takeover, the share of solar power in RWE's U.S. portfolio will be 40%, up from 3% currently, the presentation slides show.
The deal, which is expected to close in the first half of 2023, will make RWE the fourth-largest player in the U.S. renewable energy market, which plays a key role in its green expansion, although it is still significantly behind the largest player NextEra, which has about 58 GW of generating capacity.
RWE's expansion into the U.S. comes at a time when Germany is struggling with the consequences of the complete disruption of Russian gas supplies, which has already led to the nationalization of its smaller competitor Uniper.
The activist energy fund Enkraft Capital, which owns 0.15% of RWE, said it was unclear how RWE could have spent 7 billion euros on an M&A deal in the United States amid the biggest energy crisis Germany has ever seen.
But Qatar-based QIA CEO Mansour bin Ebrahim Al Mahmoud said the company was proud to support RWE's efforts to become a global leader in renewable energy.
QIA's investment expands Qatar's relationship with Europe's largest economy, which already includes stakes in Volkswagen, Deutsche Bank and Porsche.
The deal, the largest for RWE since the collapse of its former Innogy unit was announced in 2018, will immediately boost profits, providing RWE with an additional $600 million a year in core revenue.
This comes nearly a year after RWE refined its global renewable energy roadmap, which includes 50 billion euros ($49 billion) in gross investment through 2030, of which 15 billion is earmarked for the United States.
RWE also confirmed plans to pay a dividend of €0.90 per share for 2022.