RWE wraps up EUR 5.1 bn sale of gas unit to Russian-controlled fund

(FRANKFURT) - German power giant RWE said Monday it has wrapped up the sale of its oil and gas unit Dea to a Russian-controlled investment fund, LetterOne.

"The LetterOne Group and RWE today completed RWE's sale of RWE Dea to LetterOne," the Germany group said in a statement.

"The agreed enterprise value is approximately 5.1 billion euros ($5.7 billion) based on current exchange rates. Due to exchange rate fluctuations, this is slightly higher than the amount agreed on when the sale was announced in January," the statement said.

The deal, originally announced last year, had been held up because the British authorities had not yet given their nod of approval.

But a compromise solution was reached whereby LetterOne Group would keep Dea UK separate from the remaining RWE Dea activities "for a number of years" in case possible sanctions were imposed on LetterOne and its owners.

LetterOne is based in Luxembourg, but controlled by Russia's Alfa Group which belongs to billionaire entrepreneur Mikhail Fridman.

The sale is a key part of RWE's strategy for reducing debt and freeing up investment for the transition away from fossil fuels towards renewable energy currently under way in Europe.

However, it was controversial given the crisis in east Ukraine and Europe's threat of tougher sanctions against Russia. And it drew strong criticism, notably from the opposition Green party, and drove debate about Germany's dependence on Russian fossil fuels.

Nevertheless, the German government approved the deal last August, saying it would not affect the security of supply in Germany.

RWE chief executive Peter Terium said his group "can now focus fully on its core business."

LetterOne chief Mikhail Fridman said: "We are delighted to have completed the acquisition of Dea. Our ambition is to develop and grow Dea. We are convinced that the current macroeconomic environment and the low oil price, give us an opportunity to achieve our ambition."