Eon urged to hive off distribution assets

Activist investor Knight Vinke has urged Eon to further split up its business by separating its energy distribution businesses from the new Eon brand.

Knight Vinke chief executive Eric Knight has renewed his calls for further Eon divestments according to a report in the Financial Times yesterday.

The hedge fund bought shares in Eon early last year and in May 2016 Vinke wrote to the company, urging it to elaborate on its existing breakup strategy by also divesting its distribution business.

In renewing this call, Vinke said that hiving off the electricity and gas distribution businesses would improve their attraction to investors.

He said there is “huge institutional [investor] demand for a pure network business and the value of that would be substantially greater than that of [Eon] as a whole.” He added that energy networks offer “exactly the kind of asset” that investors looking for dividend yield require.

Eon split its business in two last year, separating its gas-fired plant, energy trading and gas production activities from its renewable energy, distribution and retail business. The former group of activities now operate under the name Uniper while the latter continue under the Eon brand.

The company has responded to Vinke’s comments saying that a disposal of its distribution businesses would conflict with its strategy to focus on all three elements of the new Eon business. This strategy was agreed at an annual meeting in June last year and was supported by 97 per cent of votes.

Eon’s distribution activities are all based in mainland Europe and serve around 26 million grid customers across the region.