CFO Markus Krebber told Reuters that the windfall from any future sale of the stake, which analysts value at up to 4 billion euros (3.56 billion pounds), would be invested in remaining businesses focussed on renewables, remaining fossil fuels and energy trading.

Once the deal with E.ON is completed, RWE will communicate a new strategy, he said.

"We will look carefully into our market positions in each country and how to strengthen these, and we have financial flexibility," Krebber said during a conference in Munich.

RWE is currently focussed on coal-fired power plants but Germany has vowed to phase out nuclear and coal energy and is pushing for renewables.

To be successful in renewable energy it was important to be diversified across regions and technologies, Krebber said.

The pending deal entails carving up RWE subsidiary Innogy and transforming RWE into Europe's third biggest renewable operator.

RWE could look at making small renewable acquisitions in some of the countries it operates in, Krebber said.

"Don't expect giant transactions, but we want to grow in renewables and that wish entails keeping such options open," he said, declining to specify targets.

RWE through the deal will bring installed renewable capacity to 9 gigawatts (GW) with an especially strong offshore wind portfolio which it plans to expand in core and overseas markets.

It will become the number two in offshore wind globally and operate Europe's fourth biggest gas plant fleet.

It plans to spend 1.5 billion euros a year to grow its portfolio, it has said.

RWE expects by the end-of-year or early 2020 to complete a compensation deal it is negotiating with the government for closing coal-fired generation plants, Krebber said.

He wants 1.2-1.5 billion euros per GW of closed capacity, in order to account for payments to affected workers and renaturising land in coal mining and burning regions.

"It is not about making a profit but to be reimbursed for increased expenses...," he said.

RWE expects to have to shut 3 GW up to 2023 and shed 2,700 workers.

Krebber reiterated RWE will hold on to a 25.1% stake in high-voltage power transmission grid Amprion.

Two people familiar with the matter said on Tuesday that Amprion is evaluating options to bring in fresh funds to finance necessary spending on the networks.

(Reporting by Vera Eckert, editing by Joseph Nasr and Elaine Hardcastle)

By Vera Eckert