Engie SA is considering an offer for German renewable-energy utility Innogy SE as its majority owner RWE AG weighs strategic options, people familiar with the matter said.

The former French natural-gas monopoly is speaking to advisers and hasn’t made a final decision about whether to proceed, the people said, asking not to be identified because the deliberations are private. The considerations are preliminary and may not lead to an offer, they said. Innogy had a market value of 18.6 billion euros ($19.8 billion) at the close of trading on Monday, before Bloomberg reported the potential deal, according to Bloomberg.

Representatives for Engie and Innogy declined to comment. RWE declined to comment on a sale and reiterated that it “can in principle sell Innogy shares and thereby reduce its stake to 51 percent.” RWE owns about 77 percent of Innogy’s shares after splitting the company off last year.

RWE Chief Executive Officer Rolf Martin Schmitz said Tuesday that the company is looking at a number of strategic options. The utilities sector is likely to see “large, game-changing” mergers and acquisitions because of low borrowing costs and stronger balance sheets, according to a January report from Goldman Sachs Group Inc., which advised RWE on the Innogy spinoff.

RWE is working with two financial advisers as it weighs several strategic alternatives, including potential options for its stake in Innogy, two separate people familiar with the plans said. Innogy may attract interest from other large European utilities seeking to expand in renewables, the people said. The advisers are also consulting on shareholder relations, options for consolidation, as well as potential defense against takeovers, they said. RWE, which said Tuesday that 2017 profit will get a boost from its Innogy and trading divisions, advanced as much as 9.4 percent in Frankfurt, the biggest intraday gain since May. Innogy rose as much as 8.2 percent and Engie slipped 2.8 percent in Paris.

RWE and its main competitor EON SE, once among the biggest companies in Germany, have been transformed by Chancellor Angela Merkel’s shift toward an economy underpinned by renewable energy instead of nuclear and fossil fuels. Wholesale power prices have dropped more than 40 percent since 2011, resulting in combined writedowns of almost 30 billion euros.

In an attempt to turn the tide, both companies split themselves in two: as well as Innogy’s separation from RWE, EON spun off its legacy fossil-fuel business into Uniper SE. The shake-up stirred talk of consolidation in the industry. EON has also considered a tie-up with Innogy, people familiar with the matter said in January.

In the event of a sale of Innogy, “RWE would have lots of money but no sustainable business model,” Erkan Aycicek, an analyst at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart.

Engie, 29 percent held by the French state, is also trying to shift away from fossil fuels. The company was negotiating the sale of a stake in its oil and gas business to Neptune Oil & Gas Ltd., people familiar with the matter said last month. France, which will hold its first round of presidential elections next month, has been reducing its interest in Engie, selling 4.1 percent in January.

Engie will reinvest the 15 billion euros it expects to raise from disposals to expand in energy services, renewable power and gas pipelines, where revenue is regulated or more predictable. It’s bidding for renewable projects in the Middle East and predicts that solar power, battery storage and rising sales of electric vehicles will all weigh on demand for crude.