E.ON seeks one billion euro Terni plant deal in first half: sources

MILAN/FRANKFURT (Reuters) - German utility E.ON EONGn.DE aims to sell its most valuable asset in Italy, a 531 megawatt (MW) hydro-power plant valued at at least 1 billion euros ($1.13 billion), in the first half of this year, several people familiar with the deal said.

The headquartres of German utility giant E.ON are seen before a news conference in Duesseldorf December 1, 2014. REUTERS/Ina Fassbender

Italian renewable energy group Erg ERG.MI is seen as the front runner to buy the asset, the sources said.

E.ON and Erg declined to comment.

“It doesn’t make sense for E.ON to hold on to an isolated plant in a country it no longer sees as core,” one of the people familiar with E.ON’s thinking said.

Earlier this month, the company struck a deal to sell its entire portfolio of Italian gas- and coal-fired plants to Czech energy firm EPH for an undisclosed sum. In November, it sold its Spanish business to Australian infrastructure investor Macquarie MQG.AX.

E.ON, which finds itself in a major restructuring after announcing it would split in two in 2016 to focus on renewables and power grids, is currently trying to offload the remaining parts of its Italian unit in a bid to raise much-needed cash.

Smaller assets E.ON is seeking to offload include the company’s Italian client business with access to about 860,000 customers, as well as 374 MW worth of wind and solar capacity.

Infrastructure fund F2i is bidding for E.ON's renewable assets, the sources said, adding it was not clear whether they had teamed up with Italian energy group Edison, which is majority-owned by France's EDF EDF.PA.

F2i and Edison have a renewable joint venture called Edens. Edison previously made a non-binding bid for all of E.ON Italia’s assets but after the deal with EPH it is not clear whether it is still in the race.

Italian utility Estra Energie and wholesale gas trader Italtrading are jointly bidding for E.ON’s client portfolio and have reached the due diligence phase, the sources said.

Hera HRA.MI, Italy's No. 2 regional utility, confirmed it submitted a bid for the customer base, but one of the sources said the Estra bid was more advanced.

Edison and F2i declined to comment, while Estra and Italtrading were not immediately available for a comment.

Editing by Jonathan Gould and Vincent Baby