This is not a major setback to the German power company's international expansion plans. It still plans to invest $26 billion to become one of Europe's largest energy companies. E.ON has lost interest in the Italian operations more because they will be low-margin and will not provide it with access to the consumer market.
Germany's second-largest power group, E.ON, today announced that it would no longer be joining forces with Finmeccanica to bid for part of the generating capacity to be divested by Italian power giant, Enel. This move follows the announcement that the ownership limit for public entities bidding for the new companies would be set at 30%.
It looks like E.ON is no longer interested in the acquisition, partly because it would not actually help the company to gain access to the Italian distribution and supply markets. Since Enel is selling off its least profitable plants, it would also mean acquiring some of the most costly generating capacity in terms of operation costs. As E.ON is keen for all its new ventures to be as profitable as possible, the acquisition of costly generation capacity on its own looks unattractive, to say the least.
But E.ON still plans to spend $26 billion on expanding, not just into neighboring countries, but across the whole of Europe, including the UK, Spain and, when the time is right, Italy. The company has already won business in neighboring Austria, and has stakes in companies in the Netherlands, Sweden, Switzerland and central Europe. However, some of the richest pickings also await in Europe's more far-flung markets including the UK and Spain. It will not be long before the company has a slice of every one of the region's competitive energy markets.