Bidders submit binding offers for RWE unit DEA, say sources-Reuters

(Reuters) – Bidders have started submitting binding offers for DEA, the oil and gas production unit of German utility RWE, and a deal could be struck as early as this month, three people familiar with the matter told Reuters.

“RWE is stepping up the pressure to get the sale done soon,” one of the sources said, adding the group was already excluding DEA in its mid-term planning.

With operations in 14 countries including Germany, Britain, Norway and Egypt, DEA employs nearly 1,400 and accounted for about 9 percent of RWE’s operating profit last year.

It has stakes in about 190 oil and gas licences or concessions in Europe, the Middle East and North Africa, some of which are non-producing and in need of large investments.

Some final bids for DEA have already been submitted and the remaining ones are expected this week, two of the sources said, adding BASF’s oil and gas exploration unit Wintershall, Russian tycoon Mikhail Fridman and Hungarian oil and gas group MOL were still in the race.

A consortium consisting of U.S. private equity firm KKR and Kuwait Petroleum Corp’s Kufpec have put in a “cautious” bid after their interest in the asset cooled off, two of the sources said, adding the offer was unlikely to succeed as a result.

RWE, MOL, KKR, Fridman and Wintershall all declined to comment, while Kufpec was not immediately available to comment.
A deal could be signed as soon as this month, the three people said, though did not rule out that it may take until April for an agreement to be reached.

RWE Chief Executive Peter Terium last week said the group aimed to complete the sale, first announced a year ago, by the middle of the year, adding it was on track to achieve this.

No financial details of the binding bids emerged, but one of the sources said that the range was expected to be similar to what was offered in the first round, when bids ranged between 3.5 billion and 5 billion euros ($4.9-6.9 billion).

One of the main factors behind the wide valuation range is DEA’s portfolio in Egypt, bankers have said, pointing to the country’s political situation as well as large investment commitments by DEA.