Bloomberg News

RWE Said to Pick Deutsche Bank to Weigh Options for Dea Unit

October 26, 2011

Oct. 26 (Bloomberg) -- RWE AG, Germany’s second-largest utility, is working with Deutsche Bank AG to explore the sale of all or part of its oil and natural gas exploration unit, said three people with knowledge of the process.

Possible suitors for the Dea business include oil and gas companies, as well as sovereign wealth funds, said two other people, who declined to be identified as the process is private. The business is valued at about 7.2 billion euros ($10 billion), according to Ashley Thomas, an analyst at MF Global in London.

RWE is raising as much as 11 billion euros to help finance new energy projects as its home country cuts its reliance on nuclear power. The company, which posted a quarterly loss and slashed full-year profit targets two months ago, also may divest its Czech NET4GAS gas-grid unit and its stake in Berlinwasser Holding AG.

Spokeswomen for Essen-based RWE and Frankfurt-based Deutsche Bank declined to comment.

The RWE Dea division, which posted 1.5 billion euros in revenue last year, has stakes in projects in Norway, Denmark and Germany, as well as Egypt and other North African countries, and owns licenses to explore for oil and gas in southern Poland.

The German government’s decision to close the country’s nuclear power plants by 2022 was a “substantial” risk to RWE’s earning power, the company said in its interim report. Germany decided to make utilities pull out of nuclear energy after Japan’s nuclear disaster in March.

In August, France’s GDF Suez SA announced the sale of 30 percent of its exploration unit to China Investment Corp. for 2.3 billion euros, gaining funds to help cut debt and expand in Asia. The GDF unit reported 2.2 billion euros in revenue in 2010, and was valued at about 8.1 billion euros by the CIC deal.

--With assistance from Kari Lundgren and Brett Foley in London and Stefan Nicola in Berlin. Editors: Chris V. Nicholson, Julie Alnwick

To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Matthew Campbell in Paris at mcampbell39@bloomberg.net

To contact the editors responsible for this story: Julie Alnwick at jalnwick@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net


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