Deal struck by RWE, approval granted by JPMorgan
In a significant move, German energy company RWE has announced a new joint venture with asset manager Apollo Global Management. The venture will see RWE contribute its stake in transmission grid operator Amprion, with no other co-financier indicated for the 25.1% share. The remaining 74.9% of Amprion is held by the M31 Beteiligungsgesellschaft, a company involving insurers and pension funds such as Swiss Life and Talanx.
Analysts have viewed the RWE-Apollo joint venture positively, with Javier Garrdo, an analyst from US bank JPMorgan, maintaining his "Overweight" rating for RWE shares and setting a price target of 46.50 euros. This optimistic outlook has potentially contributed to RWE's stock gaining at the start of the week, with shares rising by 1.3% to 35.47 euros on Monday morning.
The funds received from Apollo, amounting to 3.2 billion euros, will be used for the expansion of Amprion's grids. RWE will retain operational control of Amprion after the joint venture, ensuring continuity in its strategic operations.
Javier Garrdo believes the option to divest the stake at a later date remains, offering potential flexibility for RWE's future plans. The transaction between RWE and Apollo is expected to be completed by the end of 2025.
Amprion operates the major power lines in Germany, making it one of four transmission grid operators in the country. This joint venture is expected to strengthen RWE's position in the energy sector, providing capital for Amprion's investment program over the next decade at more favorable terms than state-regulated returns of Amprion.
The price increase on Monday morning and the break above the short-term downtrend brightens the chart for RWE shares. The next hurdle for RWE shares is the 38-day line, a key technical level that, if surpassed, could indicate further upward momentum for the stock.
In the long run, DER AKTIONÄR remains convinced of RWE's strategy, suggesting that this joint venture is a strategic move that could yield significant benefits for the company in the future. This year's gain for RWE shares is now 23%, outperforming the DAX, which has risen by 19%.
This news marks an exciting development for RWE and the energy sector as a whole, as the company continues to navigate the challenges and opportunities presented by the transition towards a more sustainable energy future.
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