E.ON AG (EOAN.XE)-- Germany 's largest utility by market value--said Thursday it has begun "exploratory talks" to discuss the possibility of a sale of its majority stake in a regional energy provider to local municipalities.

In a written statement, E.ON said that discussion over the future of its unit E.ON Westfalen Weser had been initiated during "regular strategy meetings in the fall of 2011".

E.ON owns just under 63% in the regional energy provider, with local municipalities like the towns of Paderborn and Herford owning the remaining 37%.

The comments confirm recent press reports that said E.ON is in talks to sell its stake in the unit to local municipalities.

E.ON Westfalen Weser generated EUR627.5 million in revenue in 2010 and employs around 1,000 people.

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