November 28, 2014 / 7:15 AM / 5 years ago

E.ON sells majority in U.S. wind farms to Enbridge

The headquarters of German utility giant E.ON is pictured before the annual news conference in Duesseldorf March 14, 2012. REUTERS/Ina Fassbender

FRANKFURT (Reuters) - German utility E.ON (EONGn.DE) agreed to sell an 80 percent stake in two wind farms in the United States to Canada’s Enbridge (ENB.TO), as the group continues to rake in much-needed cash by building and selling pricey renewable assets.

The deal gives the two wind farms - with a combined capacity of 505 megawatt (MW) - an enterprise value of about $650 million, E.ON said in a statement on Friday.

The two wind parks - Magic Valley 1 in Texas and Wildcat 1 in Indiana - provide enough power for more than 120,000 households.

The deal is part of E.ON’s ongoing strategy to divest stakes in wind farms to infrastructure investors which are keen to snap up such assets due to their stable production and guaranteed returns.

E.ON needs the money to lower its 31 billion euro ($38.6 billion) debt pile and free up cash for investments into new business areas in a move to escape an overcapacity crisis that has pushed many of its coal and gas-fired plants into losses.

Simultaneously, it bolsters Enbridge’s renewable portfolio.

“This strategic investment provides a significant contribution to our growth targets in power generation,” said Vern Yu, Senior Vice-President of Corporate Development for Enbridge, Canada’s largest pipeline company.

Over the past five years, Enbridge has spent about $3 billion in renewable assets.

Reporting by Christoph Steitz and Maria Sheahan; Editing by Jonathan Gould

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