* Agrees to sell 75 pct to group of insurers -source
* Deal values whole grid at 1 bln eur including debt -source
(Adds details, background)
By Peter Dinkloh
FRANKFURT, July 14 Germany's RWE ,
Europe's fifth-largest utility, agreed to sell its German
long-distance power grid in a 1 billion euro ($1.4 billion)
deal, a person close to the buying consortium said on Thursday.
"There is an agreement on the deal," the source, who
declined to be identified, told Reuters on Thursday.
RWE agreed to sell a 75 percent stake in the 11,000
kilometres of high-voltage lines to a consortium of insurers,
valuing the whole division at around 1 billion euros including
debt, said the person.
RWE is the third German utility to sell its power grid as
regulation diminishes returns from the networks. In addition,
weak power and gas prices as well as a tax on their nuclear
power plants made the utility predict three years of falling
Chief Executive Juergen Grossmann has said he plans to sell
8 billion euros of assets, but people with knowledge of the
matter told Reuters that he had also considered giving up
control of the utility and merging it with Spanish peer
The enterprise value of 1 billion euros equals the so-called
regulatory asset value of the 11,000 kilometre network, which is
the value the grid regulator uses to calculate the permitted
returns for the grid.
The buyer consortium consists of a group of five pension
funds of German and Swiss insurers, including Munich Re
(MUVGn.DE) and Talanx , another person close to the
transaction said on Wednesday.
Even though it is selling a majority, the German utility
wants to retain operational control of the network after the
sale, sources familiar with the matter told Reuters.
Germany is revamping its power supply after the nuclear
meltdowns in Fukushima; it took the country only months to
decide to phase out nuclear power by 2022, reversing last year's
decision to let nuclear plants run decades longer.
It might cost as much as 80 billion euros to expand the
German power grid to connect new power generation facilities to
replace its 17 nuclear power plants faster than planned, the
German grid regulator said in April.
(Editing by Will Waterman)