Under the deal, which has been agreed in principle, RWE will receive Eon's renewables business, plus Innogy's renewables and gas storage businesses.
Plans to break up Innogy and divide its assets between parent RWE and E.ON, first announced a day earlier, added 4.3 billion euros to the market value of Germany's three largest utilities in the sector's largest overhaul in recent history.
The big six pair both shrugged off fears that a complex deal between German energy giants RWE and Eon, which emerged over the weekend, would derail their plans to create Britain's second largest energy supplier.
Cash exchanged includes about €5 billion ($6.2 billion) for E.ON to buy out Innogy's minority shareholders, and RWE paying E.ON €1.5 billion ($1.85 billion), with the rest of the deal valued in shares and asset swaps.
Germany's power companies are reshaping as they look to boost green energy output, shift away from fossil fuels and prepare for Germany's exit from nuclear power in 2022.
Dirty Focus RWE's power generation capacity in Germany in MW as of end-2016 Source RWE sustainability report 2016
"It's good if there are competitive and internationally oriented energy providers in Germany". Innogy had been an investment target of interest for other European utilities including Engie, Enel and Iberdrola. One source said Australia's Macquarie MQG.AX had also been in the race.
Germany's energy market has been rapidly transformed since Chancellor Angela Merkel announced a phase-out of nuclear power after Japan's 2011 Fukushima Dai-ichi nuclear power plant meltdown.
While an agreement has been reached, closure of the transactions still require board approval on both sides and would also need to clear antitrust and regulatory approvals.
Former Innogy chief executive Peter Terium left the company in late 2017, following a profit warning, but people close to the matter said that the real reason for his departure was his opposition to the asset swap.