March 10, 2020 / 2:01 PM / a month ago

UPDATE 1-E.ON shortlists billionaires and energy group for Czech asset sale - sources

(Adds details, background)

By Christoph Steitz, Jan Lopatka and Arno Schuetze

FRANKFURT/PRAGUE, March 10 (Reuters) - German utility E.ON has shortlisted Czech billionaires and an energy group as potential buyers of its 800 million euro ($908 million) Czech retail operations, which it must sell to appease competition regulators.

The investment vehicles of four of the Czech Republic’s seven richest men - EPH, KKCG, Sev.en Energy and PPF - as well as majority German-owned utility Prazska energetika (PRE) have been asked to submit final bids by late April, sources close to the matter told Reuters.

The sale, organised by BNP Paribas, has been agreed with the European Union to secure antitrust clearance of E.ON’s purchase of Innogy’s network and retail assets, which has reshaped Germany’s energy sector.

Innogy’s break up marks the biggest overhaul in Germany’s power industry since the country sped up its exit from nuclear energy earlier this decade, and has turned E.ON into a networks and retail energy group with more than 50 million customers.

In the Czech Republic, Innogy is the country’s biggest gas suppliers to households and firms and also produces heat and electricity, among other activities. KKCG’s MND unit and PRE are also gas suppliers in the market.

E.ON’s Czech retail unit has earnings before interest, tax, depreciation and amortization of about 130 million euros, one of the sources said. It is hoping to fetch a valuation of more than six times that - 800 to 900 million euros, including debt.

Czech energy group CEZ, which operates a fleet of power stations and is also active in power distribution, trades at 6.2 times its core earnings.

Most of the billionaire bidders are familiar investors in regulated industries such as utilities.

PPF, the vehicle of Petr Kellner, the country’s richest man according to Forbes, owns a leading Eastern European telecoms group, PPF Telecom, as well as rolling stock group Skoda Transportation and banking interests.

KKCG, owned by the third richest man, Karel Komarek, owns oil & gas firm MND as well as other assets, such as the country’s leading lottery group Sazka.

The fifth wealthiest Czech, Daniel Kretinsky, has bought up a swathe of fossil-fuel powered energy assets in the country, as well as Germany, Italy and elsewhere via his EPH company.

Pavel Tykac, the seventh-richest Czech, controls mining group Czech Coal through his firm Sev.en Energy as well as power plants in the country and abroad.

PRE is 70% owned by German utility EnBW, with the city of Prague holding the rest.

E.ON and the suitors declined to comment.

$1 = 0.8814 euros Reporting by Christoph Steitz, Jan Lopatka and Arno Schuetze; additional reporting by Javon Hovet; editing by Thomas Seythal and Mark Potter

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