* Asset seen valued at 4-5 bln euros - sources
* KKR, Blackstone, Centrica likely to be interested-sources
* Qatar Petroleum interest cooled by political issues-srces
* BASF's Wintershall has already said it may bid
By Arno Schuetze and Christoph Steitz
FRANKFURT, Oct 18 German utility RWE
is asking potential buyers of its oil and gas unit DEA
to submit offers by late December, in a deal that
could fetch up to 5 billion euros ($6.8 billion), three people
familiar with the matter told Reuters.
RWE, suffering from loss-making power plants, a boom in
renewable power and 35 billion euros in net debt, said in March
it planned to sell DEA to save billions of euros of investment
in the exploration and production business.
"Bids are due around Christmas," one source said. RWE has
previously said it expects to complete the sale next year.
With operations in 14 countries including Germany, Britain,
Norway and Egypt, DEA employs nearly 1,400 and accounted for
about 11 percent of RWE's operating profit in 2012.
It has stakes in about 190 oil and gas licenses or
concessions in Europe, the Middle East and north Africa, some of
which are non-producing and in need of large investments.
Wintershall, the oil and gas arm of German chemicals company
BASF, has already expressed interest in DEA.
Private equity firms such as KKR and Blackstone
are also likely to bid, two sources said. One said they
could buy the asset, then slice it up and sell it in pieces.
Utility sector bankers also said they expect British energy
supplier Centrica to show interest in DEA.
RWE, KKR, Blackstone and Centrica declined to comment.
RWE's advisor Goldman Sachs has also been touting the
asset around Asia in the hope of attracting interest from the
likes of China's Sinopec , one of the
A senior Sinopec official told Reuters the group was
unlikely to be interested in more European oil assets after
recently buying assets in the North Sea and Egypt.
Meanwhile, the interest of Qatar Petroleum International
(QPI) in DEA is likely to have cooled because of the latter's
presence in Egypt, where Qatar had backed overthrown President
QPI was not immediately available for comment.
Egyptian assets make up about 10 percent of DEA's likely
value of between 4 and 5 billion euros including debt in any
transaction, while the northern European assets account for
three fourths, the sources said.
Based on a low-end 4 billion euros valuation, DEA would be
priced at an EV/EBITDA multiple of 3.8 times, a discount to the
4.1 times average for European oil and gas exploration and
production (E&P) companies, according to StarMine.
Illustrating RWE's need for a disposal, the company has had
negative free cash flow through the past four years, according
to Thomson Reuters data. In 2012 the figure was a negative 686