More VERBUND Hydropower in Germany, Value Realisation from Business Commitment in Turkey

VERBUND, Austria’s leading electricity company, continues to strengthen its position as one of Europe’s most important producers of electricity from hydropower. VERBUND is acquiring shares from Germany-based E.ON in eight hydropower plants on the Rivers Inn and Danube  raising its average annual production by around 2 billion kilowatt-hours (kWh). This equals the annual electricity consumption of around 600,000 households. With this acquisition of shares, these eight power plants are now wholly owned by VERBUND. Apart from that, VERBUND is buying back 200 million

kWh hydro power generation of the Zemm-Ziller power plant group This electricity procurement right was transferred to E.ON in 2009.

In return, E.ON, one of the world’s largest energy providers, will acquire VERBUND’s shares in Turkish EnerjiSA. The contracts were signed today evening after the close of trading; the closing of the transaction is expected for the first quarter of 2013.

The general conditions in the European and global economy – particularly where the energy industry is concerned – are currently extremely challenging. Against this background, VERBUND is concentrating on its strategic priorities hydropower, the markets in Austria and Germany as well as majority shareholdings. VERBUND is additionally focusing on wind power. In South-Eastern Europe, the company sees medium-term growth potential.

9% more VERBUND hydropower from run-of-river power plants, more control over investments

VERBUND CEO Wolfgang Anzengruber: “We want to concentrate on hydropower, majority shareholdings and the markets in Austria and Germany. That is why we are taking the opportunity to expand our hydropower production in Germany, and gain more control over existing investments. This transaction strengthens our position as one of the leading producers of hydropower in Europe: among other things, this will raise our electricity generation from run-of-river power plants by 9% and improve our risk profile. In addition, it will open up further room for manoeuvre for strategic opportunities.“

In the context of the transaction, VERBUND is acquiring from E.ON shares in eight run-of-river power plants in Germany with an additional average annual production of around 2 billion kWh. Apart from that, VERBUND is buying back 20.28% of the capacity of the Zemm-Ziller power plant group (around 237 million kWh) in the course of the transaction. The additional production volumes of electricity from hydropower acquired by VERBUND exceed the feed-in quantities from wind and photovoltaic in Austria in 2011. [1]

VERBUND already had a direct or indirect interest in the acquired run-of-river power plants and held electricity procurement rights previously. After the transaction, the power plants will be wholly owned by VERBUND. In future, these power plants will enable VERBUND to generate a total average of 3.9 billion kWh of electricity from hydropower each year. All of the around 200 employees working at the power plants will be integrated into VERBUND.

Realisation of added value from Turkey commitment

With the sale of its shares in the Turkish joint venture EnerjiSA, VERBUND is realising a noticeable added value from its business commitment in Turkey. By purchasing additional hydropower capacities in Bavaria, the company is acquiring renewable electricity production which is wholly owned by VERBUND and will immediately lead to liquidity reflux. The acquisition of the hydropower plants in Germany additionally supports VERBUND’s sales and trading activities in its most important international market. In 2011, VERBUND sold around 60% of its electricity volumes in international markets – excluding own consumption. 2011 saw a sales volume amounting to around 28 billion kWh around 75% of which was sold in Germany.

The closing of the transaction is planned for quarter 1/2013, and approvals have yet to be obtained pertaining to antitrust law and other regulatory regimes.

[1] Source: E-Control, statistics brochure 2012