Under the terms of the deal, EnBW will also offload its 26% stake held in EWE over the period of time.
EWE will buy back 10% stake from EnBW for €504.8m while the remaining 16% stake will be purchased by EWE-Verban by 2019.
Upon completion of the transaction scheduled within the next six months, EnBW will own majority stake in VNG, while EWE will be held by EWE and EWE-Verband.
EnBW expects the VNG acquisition to more than double its gas business, making it the third-largest gas provider in the German market, after E.ON and Gazprom’s Wingas.
EnBW CEO Frank Mastiaux said: "For EnBW, the acquisition of VNG is a significant step in the transformation and restructuring of the company, both strategically and also financially."
The divestment comes as German utilities, including EnBW, face loss at their power plant divisions as the country shifts its focus on renewable power by replacing coal and gas-fired capacity.
Germany is also looking to exit nuclear power by 2022, reports Reuters.
EWE CEO Matthias Brückmann said: "We will devote all of our available resources to this and are strongly committed to exploiting our positive current situation so as to ensure a successful future in the changing energy industry."
EWE said that the sale is a part of its effort to focus on restructuring EWE Group in growth markets.
EWE-Verband managing director Heiner Schönecke said: "Through our investment we are supporting the strategy of EWE’s Board of Management in restructuring the Group.
"From 2017 together with the Board of Management we will initiate discussions with potential new strategic partners. We aim to find an appropriate strong partner by 2019."
Image: EWE AG headquarters in Germany. Photo: courtesy of EWE AG.
