E.ON divests

E.ON, the world's largest utility by sales, announced early Thursday that it had agreed to sell its US subsidiary to the Allentown, Pennsylvania-based PPL for 5 billion euros ($6.7 billion). The sale is conditional on approval by US competition authorities, but PPL expects the deal to close what would be the largest deal in the power sector since October 2007 by the end of the year.

E.ON will be shedding Louisville Gas & Electric Co and Kentucky Utilities Co, the two largest utilities in the US state of Kentucky, which serve 1.2 million customers and operate about 7,600 megawatts of electric generation.

The German utility is looking to reduce its economic net debt, which was up to 45 billion euros be the end of 2009, from 18 billion at the end of 2006. If the transaction goes through, E.ON is on track to surpass its 10-billion-euro target for asset sales. In its press release on the sale, E.ON described the deal as a "major step in its portfolio streamlining process."

Earlier this month, E.ON had to cancel its sale of an Italian gas grid.

hf/AFP/Reuters
Editor: Rob Turner