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Research Update: RWE AG Outlook To Negative On €9.3 Bil. Bid To Buy Essent N.V.; 'A/A-1' Ratings Affirmed Jan 09 Product Image

Research Update: RWE AG Outlook To Negative On €9.3 Bil. Bid To Buy Essent N.V.; 'A/A-1' Ratings Affirmed Jan 09

  • ID: 2043096
  • January 2009
  • Standard & Poors

Abstract
On Jan. 13, 2009, Standard & Poor's Ratings Services revised its outlook on major German utility RWE AG to negative from stable, following RWE's debt-funded bid for the unregulated generation and supply businesses of Dutch utility Essent N.V. (A+/Watch Neg/A-1) for an enterprise value of €9.3 billion. The proposed acquisition would be mildly positive from a business risk perspective as Essent's unregulated businesses are complementary to and would diversify RWE's existing operations, while entailing limited integration risks. The proposed transaction is, however, not a transforming acquisition, which would fully address RWE's strategic issues, especially its high carbon intensity and resulting exposure to tightening EU carbon constraints. On the financial side, the proposed, all cash- and debt-funded acquisition will exhaust all...

Companies mentioned in this report are:
- RWE AG
- RWE Finance B.V.

Action: Affirmed
Action: Outlook: Negative

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