The USA’s Southern Company has won an important legal victory in its battle for control of Berlin utility Bewag. It has gained a ruling allowing it to go to independent arbitration after a state court refused to lift an injunction blocking the sale of a significant stake in the company to a rival. The court ruling followed Southern’s rejection of a conciliatory offer that would see the company take a leading role within a power alliance, in return for dropping its rights in Bewag. The offer, made by the Berlin Senate, would have given Southern a 25.1 per cent stake in a future consortium which would become Germany’s fourth major power interest.
Southern Co already holds a 25 per cent stake in Bewag and raised a legal challenge to the sale of a further 49 per cent stake to HEW, majority owned by Sweden’s Vattenfall. Though the Bewag sale was required by regulators as part of the merger agreement to form E.On, Southern halted the deal as a major shareholder in Bewag. As a solution to the problem, the Senate has suggested that Southern get a stake in a newly created fourth entity comprising Bewag, Veag the eastern utility and Laubag the mining sector interest. Bewag and HEW would also take a leading share, but similarly would combine bids for Veag and Laubag, also on sale under regulatory orders, and divide the entirety between the three major interests. Bewag would hold 60 per cent of the new combined entity, HEW would hold the remaining 40 per cent. Furthermore, under the terms of the compromise deal, E.On would be obligated to offer Bewag first refusal on around 12 per cent it holds in Berlin gas company Gasag. Vattenfall and HEW have already agreed to the compromise deal but Southern has rejected the offer.
E.On has stated that it intends to appeal against the ruling, although it will actively pursue the arbitration process, which could extend through until March.
