Plans to carve up Innogy between parent RWE and rival German utility E.ON drove its shares sharply higher on Monday, lifting the combined value of the three German energy firms by 5.7 billion euros ($7 billion).
This move would transform both companies, giving RWE a combined share in wind power second only to Iberdrola in Europe, and giving E.ON a share of the retail market that could raise antitrust implications in Germany, where the two companies are already dominant players, and in the United Kingdom, where they are two of the six biggest retailers.
Share in Innogy, RWE, and E.ON all surged this morning as the markets responded positively to the news.
In November, SSE and npower announced the merger of SSE's household supply and service with that of npower, owned by innogy, which was set to create a major float on the London Stock Exchange, with the enlarged and independent business looking to take a premium listing.
Before striking a deal with E.ON, RWE held talks with European peers Enel and Engie and came close to a deal with Spain's Iberdrola before Christmas, people familiar with the matter said.
Analysts at Jefferies said that Innogy's takeover by Eon, which also has a substantial United Kingdom household supply business, could "complicate" the merger between SSE and Npower and make regulatory approval more complex. One source said Australia's Macquarie MQG.AX had also been in the race.
"It's good if there are competitive and internationally oriented energy providers in Germany", she said in a statement. However, the deal still needs the approval of each company's supervisory board.
Recent financial results have suggested the re-organisation is starting to pay off for both companies, with E.ON agreeing in January to sell a minority stake in its fossil fuel business Uniper to Finland's Fortum for €3.8bn in January.
Eon is set to acquire Innogy from RWE, in a far-reaching asset swap that will see Eon concentrate on retail and networks, while RWE focuses on renewables and other forms of generation. Today it reported 2017 results, saying its adjusted net profit grew by 9% to more than Euro 1.22 billion.