Consolidated Edison Inc. agreed to sell its renewables business, Con Edison Clean Energy Businesses Inc. and subsidiaries, to RWE AG unit RWE Renewables Americas LLC for $6.8 billion, subject to certain customary adjustments.

"The transaction we announced today will allow Con Edison to sharply focus on our core utility businesses and the investments needed to lead New York's ambitious clean energy transition," said Con Edison Chairman, President and CEO Timothy P. Cawley.

Headquartered in Valhalla, N.Y., Con Edison Clean Energy Businesses operates and develops renewable projects in the U.S., with about 3 GW of operating capacity — of which 90% is solar — and a development pipeline of more than 7 GW.

With the transaction, RWE's renewables portfolio in the U.S. is almost doubled to 7.2 GW of projects in operation and will make the company the second largest solar operator in the U.S.

"The acquisition of Con Edison Clean Energy Businesses is a major boost for RWE's green expansion in the United States, one of the most attractive and fastest-growing markets for renewable energy. The unique combination of complementary portfolios in onshore wind, solar and batteries creates one of the leading renewable companies in the U.S. market," said RWE CEO Markus Krebber.

READ MORE: RWE CEO hails Inflation Reduction Act in Con Edison clean power deal

To help fund the deal, RWE will issue a €2.43 billion mandatory convertible bond to a subsidiary of Qatar Investment Authority, the sovereign wealth fund of the state of Qatar. The bond will be converted into new ordinary bearer shares that will represent just under 10% of RWE's existing share capital.

In an Oct. 2 note, analysts at Jefferies said they "see the deal as a positive strategic move by RWE" and now expect RWE to have approximately 38 GW of net wind, solar and battery capacity in 2030, up about 23% from the company's previous plan of 31 GW.

The deal is facing opposition from activist energy fund Enkraft Capital GmbH. "It is completely incomprehensible how Germany's largest energy company can spend €7 billion on an M&A transaction in the U.S. amidst the biggest energy crises Germany has ever seen," Enkraft said in a statement.

In August, RWE declared plans to invest more than €5 billion in green energy projects in fiscal year 2022 as Europe races to reduce reliance on Russian gas.

Expected to close in the first half of 2023, the deal will require certain regulatory approvals, including expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and approvals by the Committee on Foreign Investment in the United States and the Federal Energy Regulatory Commission.

In connection with the transaction, Con Edison also intends to cancel its previously announced plan to issue up to $850 million of common equity in 2022 and has withdrawn its equity guidance for 2023 and 2024.

Barclays was financial adviser and Latham & Watkins LLP was legal adviser for Con Edison.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.