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. Last Updated: 07/27/2016

Gazprom in Line for VNG Stake

FRANKFURT, Germany -- Germany's largest utility E.ON will break up its 42 percent stake in east German gas supplier VNG and sell it to a number of domestic and foreign companies, including Gazprom, a German newspaper reported Friday.

E.ON is forced to give up its VNG shares to meet government conditions tied to its takeover of national gas market leader Ruhrgas earlier this year.

Sources close to the matter said E.ON had ceased negotiations with Gaz de France and Norway's Statkraft, who were both still interested in buying VNG.

Industry sources value VNG at 2 billion euros ($2.4 billion) as a whole.

E.ON will sell 5.26 percent to a consortium of Gazprom and Wintershall, which already holds 21 percent in VNG, Die Welt newspaper said. Some 26.84 percent will be sold to German regional utility EWE, already an active energy supplier in northeast Germany, it said.

The east German municipalities that own part of VNG have been expected to exercise an option to buy 10 percent in VNG from E.ON and the newspaper said they had agreed this.

EWE chairman Werner Brinker said the report was "pure speculation." E.ON, VNG, Wintershall and Statkraft all declined to comment.

Industry sources said the ministerial order forcing E.ON to sell stipulated it had to sell its VNG stake to a buyer who could play a strategic role in the market and that it was not clear if the plan outlined in Die Welt would be permitted.