RWE AG, the global renewable energy company, has announced that it has signed a purchase agreement with Con Edison to acquire all shares in Con Edison Clean Energy Businesses Inc (Con Edison CEB).

Developing renewable energy plants for the energy sector

Con Edison CEB is headquartered in Valhalla, New York, and is a leading operator and developer of renewable energy plants in the United States. The company has about 3GW of operating capacity – 90% in solar energy – and with a strong development pipeline of more than 7GW.

RWE and Con Edison have agreed on a purchase price based on an enterprise value of US$6bn. At a multiple Enterprise Value/EBITDA of 11x, this represents an attractive price. Furthermore, with EBITDA of around USD$600m from year one on, the acquisition is earnings accretive, a statement said.

The transaction marks a milestone in RWE’s growth ambitions in the United States, the statement added. Once completed, it will make RWE the number four renewable energy company, and the second-largest solar operator, in the United States. 

The US is one of the largest and fastest growing markets for renewable energy globally, with the Inflation Reduction Act setting a stable and reliable 10-year framework for investments in clean energy.

“The acquisition of Con Edison Clean Energy Businesses is a major boost for RWE’s green expansion in the United States, one of the most attractive and fastest growing markets for renewable energy. The unique combination of complementary portfolios in onshore wind, solar and batteries creates one of the leading renewable companies in the US market. 

“The combined development pipeline, one of the largest in the U.S., provides tremendous opportunities for sustainable and value accretive growth, backed by a strong financial position. I am very pleased to welcome about 500 new colleagues. Together, we will form a powerful RWE team, strongly committed to contribute to the global energy transition,” said Markus Krebber, CEO of RWE AG.

The role of renewables in the green energy transition  

By combining RWE’s and Con Edison CEB’s complementary portfolios, RWE will be able to almost double its operating asset base in the US to 7.2 GW. At the same time, the German company’s US presence becomes more widely spread across the majority of US states. The combination of both businesses also leads to a perfectly balanced portfolio across onshore wind, solar and batteries, the statement said. 

A combined project pipeline of more than 24 GW in onshore wind, solar and batteries provides one of the largest development platforms for renewable energy in the US, it pointed out. In addition, RWE is also forging ahead with the expansion of its global offshore wind activities in the country. 

Growth from the acquisition will come on top of RWE’s existing growth plans for the United States. RWE had already earmarked up to US$14.7bn gross for investment in the US, as part of its Growing Green strategy, which envisages global investments of US$49bn gross by 2030.

Con Edison CEB has a strong team of about 500 experts with a long and outstanding track record in developing, constructing and operating renewable energy projects. About 1,400 employees from both companies will form a high-performing team, fully committed to the green energy transition and stepping up RWE’s growth plans in the US in the years to come, the statement continued.

Closing of the transaction is subject to customary regulatory approvals and is expected to take place in the first half of 2023.

Financing of the acquisition and the additional growth are funded through debt instruments and an equity capital measure undertaken by RWE AG. Equity will be raised via issuance of a mandatory convertible bond to a subsidiary of QIA (Qatar Investment Authority). 

The mandatory convertible bond will have an aggregate principal amount of EUR 2,427.6m and will be converted into new ordinary bearer shares, expected to represent just under 10% of RWE AG’s existing share capital (approximately 9.09% post conversion). RWE maintains its plan to pay a dividend of EUR 0.90 per share for fiscal 2022.

Krebber added: “Our equity capital measure is the basis for financing the acquisition of Con Edison CEB and of the additional green growth in the years to come. I am delighted that QIA is supporting RWE’s accelerated growth ambitions with their capital commitment. This underlines our strategy to be one of leading drivers of the global energy transition.”