| FRANKFURT/NEW YORK, April 27
FRANKFURT/NEW YORK, April 27 Germany's E.ON
(EONGn.DE), the world's largest utility by sales, agreed to sell
its U.S. business, two people with knowledge of the matter said.
The power provider aims to announce the agreement between
Wednesday evening and Thursday morning, said the people who
declined to be identified as the transaction is still
U.S. utilities Duke (DUK.N), PPL (PPL.N) and a consortium
involving Canadian utility Fortis (FTS.TO) were the last
remaining parties in the auction, people with knowledge of the
E.ON was not immediately available for comment.
The sale, part of a slew of divestments by European
utilities to cut debt after a takeover spree, is part of E.ON's
efforts to shed more than 10 billion euros ($13.32 billion)
worth of assets by the end of the year.
A sale of the unit based in Louisville, Kentucky, would be
one of the largest utility deals in the U.S. this year next to
Ohio's FirstEnergy Corp (FE.N) takeover of Pennsylvania's
Allegheny Energy Inc AYE.N in a deal currently valued at about
$4.4 billion in stock.
E.ON had bought the E.ON U.S. unit, formerly known as LG&E,
in 2002 as part of its 9.6 billion pound ($14.85 billion)
takeover of Britain's Powergen, but the overseas operation
remained separate while it was integrating European operations
such as energy trading.
Powergen had paid about $3.2 billion for LG&E in 2000.
The division, which E.ON calls "U.S. Midwest", generated
earnings before interest, taxes, depreciation and amortization
of 552 million euros in 2009 on sales of 1.8 billion euros.
Utility deals in the United States are a drawn-out
procedures which face tough scrutiny from states and regulators.
A planned merger of FPL Group (FPL.N) and Constellation
Energy Group CEG.N fell apart due to such scrutiny.
Because E.ON is still 4 billion euros shy of its divestment
target, selling the business would be a major step to execute
The divestments are meant to reduce E.ON's economic net
debt, which soared to 45 billion euros by the end of 2009, from
18 billion at the end of 2006.
Economic net debt includes the company's liabilities plus
its pension liabilities and obligations for its nuclear power
plants, minus its cash and other funds.
E.ON had to cancel the sale of its Italian gas grid earlier
E.ON also operates wind farms in the United States which are
part of its renewables business and are not operated by the E.ON
U.S. Midwest unit.
Goldman Sachs is advising E.ON on the sale.
(With reporting by Quentin Webb in London; Writing by Peter