EPH to acquire Vattenfall's German lignite coal ops-sources

PRAGUE/FRANKFURT (Reuters) - Czech investor EPH is set to buy Vattenfall’s [VATN.UL] loss-making lignite coal mines and associated power plants in Germany after the two contending bidders dropped out, three people familiar with the matter said on Friday.

The deal is expected to be signed next week, one of the sources said, while Vattenfall’s supervisory board is expected to give a final nod in about 10 days, two other people said. Czech Coal had dropped out of the bidding, one of the people said.

Germany’s Steag and Australian investment fund Macquarie also dropped out, another source said. The two had proposed setting up a foundation to run and eventually wind down the assets and had asked for a large contribution from Vattenfall.

EPH, which teamed up with Czech private equity group PPF Investments, declined to comment, as did Vattenfall and Macquarie. Czech Coal was not immediately available for comment.

Vattenfall, which is selling the German lignite assets as part of its strategy to reduce its carbon exposure, in March said its production mix would change dramatically if the lignite sale went forward, making it a utility with one of the smallest carbon footprints in Europe.

The company said in March it has revised its emission reduction target to 21 million tonnes by 2020, down from previous 65 million tonnes, while its carbon emissions stood at 84.3 million tonnes in 2015.

Additional reporting by Christoph Steitz in Frankfurt, Nerijus Adomaitis in Oslo and Sven Nordenstam in Stockholm; Editing by Maria Sheahan