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RWE partnering with Essent

(PresseBox) (Essen, ) .
- Recommended cash offer for the commercial activities of leading Dutch utility
- Essent to become RWE's operating company in the Netherlands and Belgium
- RWE strengthens core competencies and improves CO2 balance
- Essent's Executive and Supervisory Boards recommend and support the transaction
- Transaction fulfils RWE's financial investment criteria

RWE AG today announced that it will enter into a partnership with Essent N.V., the Arnhem-based leading Dutch utility. The companies have reached agreement on the terms and conditions for a binding all-cash offer by RWE to the shareholders of Essent for the acquisition of all the issued and outstanding shares of Essent. RWE will not be acquiring Essent's electricity and gas distribution networks and waste management operations. Upon successful completion of the transaction, RWE will become one of the leading energy suppliers in the Benelux region with a strengthened position in North-Western and Central Europe.

Essent is a leading utility in the Netherlands and operates an attractive power plant portfolio based on gas, renewables, coal and nuclear. The company has a strong renewables business, which will complement RWE's own efforts to increase its renewables capacity to 4,500 MW by 2012. Both companies' efforts in the area of carbon capture and storage also complement each other.

Essent (excluding the network and waste management activities) has pro forma estimated revenues and a pro forma normalised EBITDA for 2008 of €6.55 billion and €882 million, respectively, and approximately 7,800 employees. Essent's principal shareholders are the provinces of Noord-Brabant, Limburg, Overijssel, Groningen, the Association of Municipal Shareholders Limburg, the Association of Municipal Shareholders Noord-Nederland and the municipalities of 's-Hertogenbosch and Tilburg.

Describing Essent as an excellent match for RWE, Juergen Grossmann, Chief Executive Officer of RWE, said: "I am extremely pleased about entering into this new partnership with Essent. We are teaming up with a successful and attractive company, with strong market positions in gas and in the power retail market in the Netherlands and Belgium - markets that are very close to us, not just geographically but also culturally. Essent's track record in the renewables and trading business, its customer service activities including branding and its expertise in the gas sector make it a perfect match for our company. Jointly, we will strengthen our position as one of the leading energy companies in Europe. Together, we are well positioned to increase security of supply in North- Western Europe and to contribute to making sustainable and affordable energy available in the Netherlands."

"We are determined to foster and strengthen the Essent brand. Essent will become RWE's operating company in the Netherlands and Belgium and will continue as an independent entity responsible for the execution of the Group's strategy in these markets. We are joining forces in the renewables sector, focusing on wind and biomass, and in our efforts to develop the carbon capture and storage technology for a climate friendly and affordable future energy supply", he continued.

The Chief Executive Officer of Essent, Michiel Boersma, commented: "Essent will now team-up with a leading and respected foreign partner. This opens a wide range of possibilities for our company, our employees and our customers. In the current situation of a rapidly changing market Essent partnering with RWE will create a strong foundation for the future".

The Executive and Supervisory Boards of Essent, after having duly considered the strategic, financial and social aspects of the transaction, fully support it and conclude that it is in the best interest of the shareholders and all other stakeholders of Essent. They recommend that Essent's shareholders accept the offer. The Shareholders Committee, representing 100% of Essent's issued and outstanding share capital, has also indicated its full support for the transaction.

Within a rapidly consolidating and liberalised European market, Essent will be the platform for growth in the Netherlands and Belgium, backed by the financial strength and operating experience that the RWE family of companies will make available to Essent. Joining forces with RWE gives Essent the scale and financial strength to secure its growth ambitions for the years to come. RWE is currently running the biggest investment programme in its history, with an overall investment volume of over €32 billion by 2012, making it one of the largest investors in Europe. RWE is strongly committed to the Dutch market and has the financial strength to fulfil that commitment. Investments in the Netherlands will be made in all parts of the value chain.

Essent has been handling gas for 150 years and has been generating, trading, distributing and supplying electricity for over 90 years. Essent has one of the most successful trading departments in Europe. Combined, the companies will have a gas supply purchase volume of 53 bcm, enabling them both to benefit from improved access to gas on competitive terms. As part of a larger entity, Essent's ability to invest in new production capacity and secure long-term supply contracts will increase.

RWE is already present in the Dutch market: Through its regional company RWE Energy Nederland, RWE currently supplies gas and electricity to 340,000 households and more than 50,000 businesses. RWE is also planning to construct a combined biomass and coal-fired power station in Eemshaven with a capacity of 1,560 MW, which is scheduled to be commissioned in 2012 and will be carbon capture ready. Essent's experience in biomass co-firing is industry-leading and will be of benefit to this Eemshaven power station. Furthermore, RWE's transmission systems operator and its Dutch counterpart TenneT TSO have recently set up the first security centre of its kind in Europe to support the security management of extra-high voltage grids in Germany and the Netherlands.

Grossmann stated: "RWE's financial strength as well as our scale and skills will also support Essent's ongoing investment programme. We see the Dutch market as key, and we will earmark investments to secure sustainable power supply for Europe by developing and further supporting the broad energy mix in the Netherlands. Jointly, both companies will generate power from a flexible and diversified fuel mix based on renewables, coal, gas and nuclear. Combined with power station modernisation efforts in Europe, the development of its renewables business, and research into carbon capture and storage technology, RWE will reduce its average CO2 intensity through this acquisition, which is good news for climate protection. We are committed to our core market, even beyond national borders." Essent's CO2 intensity per kWh is about 40% below RWE's.

Through this transaction, RWE will gain 5.3 million customers, of which approximately 250,000 are based in Belgium and 1 million in Germany. Upon completion of the transaction, RWE will supply electricity to over 22.5 million and gas to approximately 12.5 million customers in Europe, further strengthening its leading position in the European power sector. Across Europe, the RWE Group will have total installed capacity of around 51 GW.

RWE intends to make a binding cash offer to the shareholders of Essent for the acquisition of all issued and outstanding shares of Essent, but excluding the distribution network and waste management operations. The transaction will have an enterprise value of €9.3bn, before deducting net indebtedness and assuming a 100% acceptance level by Essent shareholders. This represents an EBITDA multiple of 9.6x based on pro-forma estimated EBITDA for 2009. The transaction meets RWE's financial criteria and is expected to generate €100 million of synergies per annum to be achieved by 2014. It will be funded with a new €9 billion credit facility together with existing cash balances.

The new organisation will be led by an Executive Board of four members. Two Executive Board positions will be held by current Essent management and two will be held by RWE. Operationally, the Executive Board will report directly to the RWE Executive Board. The new Supervisory Board will have five members, with three members from RWE, one from the Central Works Council and an independent Dutch national. The composition of both Boards will be announced at a later date.

Essent's business units will continue their successful operation; Essent's trading operations will be merged with the trading activities of RWE. Essent's important major offices, such as in Arnhem, 's-Hertogenbosch, Zwolle and Geneva, will continue in their current roles. The transaction is not expected to adversely affect the existing employment level and employment conditions in the Netherlands planned by Essent.

Following receipt of advice from the Essent Works Council, which is a requirement under Dutch law, RWE and Essent will enter into a definitive agreement. A submission will be made shortly to the Essent Central Works Council, and Essent expects to receive such advice within the next few weeks.

The transaction will be subject to certain precompletion conditions, such as at least 80% of the issued and outstanding share capital of Essent being tendered under the offer, successful completion of Essent's unbundling process and divestment of its waste business and obtaining the required antitrust clearances.

The Essent Executive and Supervisory Boards have committed not to recommend or support an alternative offer. RWE is entitled to a considerable break fee in the event of an alternative transaction being consummated. The transaction is expected to close in the third quarter of 2009.

Management and staff of the companies involved, the Essent European Works Council, the Essent Central Works Council, the Dutch trade unions, and the Dutch Social Economic Council (Sociaal Economische Raad) and the relevant anti-trust authorities have all been or will be duly notified of the proposed transaction.

J.P. Morgan is acting as financial advisor to RWE. Norton Rose is acting as lead legal advisor to RWE.

Essent is one of the leading energy companies in the Netherlands and delivers electricity, gas and heat to household and business customers. Essent, with an annual turnover in 2007 of €7.4bn, including the distribution network and waste business, is active in the complete energy value chain from production to delivery to the end customer. The company considers the Netherlands as its domestic market but has built up a significant market share in Germany and is increasingly active in Belgium. The company's environmental branch processes waste into energy and electricity. Essent (excluding the network distribution and waste management business) has pro forma estimated revenues and a pro forma normalised EBITDA for 2008 of €6,551m and €882m respectively and 7,800 employees. More information, photos and CVs of Members of the Board can be found at www.essent.eu

About RWE AG

RWE is among Europe's five largest utilities. The Group is active in the generation and transmission as well as the sale and trading of electricity and gas. 63,400 employees supply 20 million customers with electricity and 10 million with gas. In fiscal 2007, the Group recorded €42.5 billion in revenue. RWE is the biggest power producer in Germany and No. 2 in the UK. The comprehensive power plant portfolio and investment programme for the modernisation and construction of new generation capacity are the basis for growing earnings in the future. Power generation from renewables plays a key role in this, with a particular focus on wind, biomass and hydro power. More information regarding the transaction and RWE, including the Investor Relations presentation as well as photos and CVs of Members of the Board, can be found at

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