* Italian assets estimated to be worth about 3 bln euros
* Goldman Sachs working on E.ON's options - sources
* E.ON says portfolio review includes Italy
FRANKFURT/MILAN, Nov 28 Germany utility E.ON
has started preparations for the sale of its Italian
business and will soon begin the search for a buyer, four people
familiar with the matter said, at a price likely to be about 3
billion euros ($4 billion).
Burdened by a massive expansion of renewable energy
capacity, falling wholesale prices and tepid energy demand in
Europe, E.ON embarked on a disposal plan that has already raised
close to its target of about 20 billion euros.
"Goldman Sachs has been contacted to look into things
(regarding the Italian sale), but it's early days yet," one of
the sources said.
A banker working with a potential buyer told Reuters that he
expects an auction to begin as early as January or February.
Apart from the Italian plan, E.ON aims to rake in at least
1.6 billion euros through the sale of German business E.ON Mitte
and its stake in uranium enrichment company Urenco. E.ON and
peer RWE both own 16.7 percent of Urenco, with Britain
and the Netherlands holding a third each.
E.ON's Italian plans were reported earlier by German paper
Handelsblatt, which cited industry sources saying the business
could be worth more than 2 billion euros.
A second source confirmed that Goldman Sachs is working on
the file, adding that E.ON will not sell on the cheap.
"Three billion euros is about the right valuation. But E.ON
has even higher book values and doesn't want large write-downs,"
the source said.
Goldman Sachs declined to comment.
E.ON said it is always looking at strategic options for its
portfolio, including the business in Italy.
"Such a review may or may not result in us deciding from
time to time to evaluate a disposal of certain assets in the
portfolio," a spokesman said.
Weak energy demand has been a problem for European utilities
for some time and Italy is no exception. Italian power demand
fell 2.8 pct in 2012 and is down 3.6 percent in the first 10
months of this year.
E.ON owns about 6 gigawatts (GW) of generation capacity in
Italy, more than half of which is gas, with about 1 GW from
renewables. It employs about 1,000 staff in the country - less
than 2 percent of its total workforce - and has 860,000
It is Italy's fourth-biggest electricity producer behind
Enel, A2A and Edison, owned by French group
"It's likely there will be an Italian solution for the
conventional power assets and the renewables will go to Italian
insurers and pension funds," a banking source said.
E.ON also has a large coal-fired plant on the island of
Sardinia and a source at the Sardinian regional authority told
Reuters that E.ON could be ready to step aside in favour of
"Chinese investors recently visited the site to look at the
plant," the source said.