Germany's Federal Cartel Office is set to block E.On's planned acquisition of a majority stake in leading European gas trader Ruhrgas, but the utility giant said it will seek overriding government approval for the deal.
E.On AG said Saturday it will seek ministerial clearance for its planned takeover of a 25.5% stake in Ruhrgas AG, Europe's largest private gas trader.
The German utility giant had earlier learned that the Federal Cartel Office will block the purchase.Last July, E.On agreed with BP Plc to acquire the British oil major's controlling stake in holding company Gelsenberg AG in exchange for its oil refining and petrol station assets.
Following the Cartel Office's ruling, the stake in Gelsenberg – which has a pooling agreement with Bergemann GmbH under which the two companies between them control just under 60% of Ruhrgas' capital – will for the time being remain in BP's hands.
Now, E.On fears that other steps it had planned as part of its efforts to achieve a majority shareholding in Ruhrgas may also be blocked.
The group has an agreement with utility RWE AG, British mobile carrier Vodafone plc, and ThyssenKrupp AG to buy their shares in Bergemann.
The total market value of Ruhrgas, which is not listed, is estimated at between 10 and 11 billion euros. Economics Minister Werner Müller (independent) now has the last word on whether the transactions will go ahead.
He is widely expected to grant ministerial clearance having publicly stated that he believes Germany needs strong, internationally competitive energy groups that can secure the country a long-term supply of natural gas. The minister has argued that with a market share of 13%, Ruhrgas is not a dominant competitor in Europe.
The Cartel Office's examination focused exclusively on whether the deal would give give Ruhrgas a dominant position on the national market. Furthermore, it looked at the deal only within a time frame of two to three years.
This, industry expert Professor Dieter Schmitt argues, was too short. In five years at the latest, all possible obstacles to the creation of a single European energy market will have been cleared, he told Handelsblatt's "Energy Industry 2002" conference.
E.On said in a statement that the cartel office's rejection "ignores that fact that liberalization has already unleashed intense competition in the German and European national gas sectors".
Majority control of Ruhrgas would boost E.On's drive to focus on its core business, give it access to international gas suppliers, squeeze domestic competitors, and allow it to use Ruhrgas' technical expertise, possibly to expand into U.S. gas markets.