Germans sell £1bn UK firm for a song

A British company once valued at £1bn and hailed as a world-beater in the field of energy storage was sold yesterday for just £722,000.

RWE, the giant German utility, announced that it had disposed of Regenesys, the developer of a pioneering technology which allows power to be stored in "electricity warehouses", to the Canadian company VRB Power Systems for just $1.3m.

Regenesys was formerly part of the UK electricity company Innogy, which RWE bought three years ago in a £5.4bn deal. The huge purchase price was due, in part, to the inflated valuation put on Regenesys by stock market analysts and Innogy itself.

Innogy had been planning to float Regenesys, with analysts forecasting a price tag of anywhere between £500m and £1bn, until it was taken over by RWE.

A year after the takeover, Innogy's new German owner decided to stop funding the development of Regenesys in order to concentrate instead on its core energy generation and supply businesses and renewable energy.

RWE said it had sold the physical assets and inventory of Regenesys to the Canadians but would retain an interest in the business through a licensing deal with VRB which would entitle it to royalties on future sales. As part of the deal, RWE has also agreed to pay $2.8m for a stake in VRB.

David Threlfall, the former managing director of Regenesys, said VRB had the "skill set" to take the technology forward and make a success out of it. He added that the deal would free up resources to invest in RWE's core activities in the UK.

Under the npower brand, it has 6.3 million customers and also operates a large number of power stations. In addition, it has a growing wind power business, making it the UK's market leader in renewable energy.