The Germans ask for protection

E.ON supported the European Commission's intention to ban takeovers by foreign state-owned concerns

Discussion continues around the package of new legislative initiatives recently proposed by the European Commission aimed at tightening competition in the energy market. The head of Europe's largest energy concern E.ON, Wulf Bernotat, in an interview published yesterday with The Financial Times Deutschland, demanded that the German authorities provide protection against hostile takeovers. We are talking about foreign state-owned companies: “It cannot and should not be the case that enterprises that enjoy state protection in their own markets make purchases in free markets like Germany.” Obviously, this means either Gazprom or French energy concerns. However, Mr. Bernotat specifically noted: “We have no specific fears of being taken over. In terms of market capitalization (EUR 86 billion - Ed. ), we are the largest enterprise in Germany. This is, of course, the best protection.”

The bill on the transfer of power lines and gas pipelines belonging to large energy companies to companies independent of them, as is known, directly affects E.ON. During the previous discussion, Mr. Bernotat repeatedly spoke out categorically against the prospect of forced acquisition of private concerns from their transport networks. But he seems ready to support some of the other ideas included in the bill. In particular, the initiative to limit the possibility of purchasing European assets by companies from other countries that are directly or indirectly controlled by the state and thereby reliably protected from the prospect of being sold to foreign investors themselves. The head of the European Commission, Jose Manuel Barroso, commenting on the package of bills, focused on this initiative and said that companies such as Gazprom should be prohibited from buying energy assets in Europe.

Mr. Bernotat said in an interview that he considers it advisable to make changes to the law “On Foreign Trade of the Federal Republic of Germany”, which would provide for cases of hostile takeover. The fact is that both of the largest German energy concerns - E.ON and RWE - are completely private and do not enjoy state patronage. And both are potential targets for hostile takeovers. Precedents of this kind already exist: a large share of the share capital of Germany's third largest energy company EnBW is owned by the French concern Electricite de France, and in recent years, energy distribution companies in eastern Germany have been purchased by the Swedish Vattenfall. At the same time, information has been circulating for a long time about the possible takeover of RWE by the Russian Gazprom.

E.ON, being confident in the impossibility of a hostile takeover, on the contrary, provides for investments in the Russian energy sector. Recently, the concern, as is known, acquired a blocking stake in OGK-4 for a huge amount of money and will soon, apparently, become the controlling shareholder of this company. In addition to new acquisitions in the energy generation sector, the Germans do not exclude the prospect of their own production in Russia of part of the natural gas supplied to Germany and other EU countries. Jochen Weise, member of the board of E.ON Ruhrgas, spoke about this recently in his speech: “We will massively develop our own gas production business.” According to him, the company intends to produce at least 10 billion cubic meters annually abroad, primarily in Norway, as well as in Russia, where E.ON is negotiating participation in the development of the Yuzhno-Russkoye field. Norway, according to experts, can increase its gas supplies to Europe from the current 86 billion to 130 billion cubic meters per year by 2015. Mr. Weise noted that E.ON and E.ON Ruhrgas intend to participate in the relevant investments.

To ensure Europe's energy security, Mr. Weise said, new sources of supply are needed. Mr. Weise (his competence focuses on gas procurement issues) formulated the promising formula for gas supply to Germany and the EU as follows: “Now no one will pass by the Big Three - Russia, Qatar and Iran. And we must not lose sight of Iran.” Negotiations are reportedly already underway with possible suppliers from this country.

Yuri Shpakov, Berlin