Bids due on Monday for the oil and gas exploration offshoot of German utility RWE AG will value the unit at some 4 billion euros ($5.4 billion), sources said on Friday, well below expectations and sending its shares lower.

"The offered prices seem to be below the market value, which doesn't bode well," said one trader.

Burdened by loss-making gas and coal plants, a massive expansion in solar and wind power, and 30.8 billion euros in net debt, RWE said in March it planned to sell its DEA unit to save billions of euros it would otherwise have to invest in costly exploration and production.

Along with peers E.ON and EnBW, RWE is shedding assets in its recovery from the country's decision to exit nuclear energy by 2022, a move prompted by the nuclear disaster at Japan's Fukushima plant.

Two people close to the negotiations told Reuters offers for DEA were expected to come in at about 4 billion euros, less than the up to 5 billion that sources said had been originally targeted by Germany's second-biggest utility.

Shares of RWE, which were up more than 1 percent before the Reuters report, turned negative shortly after and traded down 1.7 percent by 1239 GMT, the biggest decliners in Germany's benchmark DAX index, which was up 0.2 percent.

"Selling DEA does not materially improve the balance sheet metrics (of RWE) and therefore we would view the disposal primarily as a strategic move to focus the business on its core activities," Goldman Sachs analyst Deborah Wilkens wrote in a note to clients.

Bidding groups

Bids are due on Monday, Jan. 20 and are expected to be submitted by three groups, four people familiar with the transaction said.

The three are Wintershall, the oil and gas arm of German chemicals group BASF ; Russian billionaire Mikhail Fridman, acting through his investment vehicle Letter One; and a consortium consisting of U.S. private equity firm KKR and Kufpec, the international arm of Kuwait Petroleum Corp, the sources said.

The interest of parties previously said to be looking at the asset, including Centrica and Blackstone, Sinopec and Maersk had cooled, two of the sources said, adding they were unlikely to form a fourth consortium.

A Sinopec official said the Chinese group was not bidding for RWE DEA. Spokespeople for RWE, Wintershall, KKR, Blackstone, Centrica and Fridman all declined to comment. Kufpec was not immediately available for comment.

A spokeswoman for Maersk said the group was "continuously seeking business development opportunities worldwide but refrains from commenting until an agreement is finalised".

With operations in 14 countries, including Germany, Britain, Norway and Egypt, DEA employs nearly 1,400 staff and accounted for about 11 percent of RWE's operating profit in 2012.

It owns stakes in about 190 oil and gas licenses or concessions in Europe, the Middle East and North Africa, some of which are non-producing and in need of large investments. ($1 = 0.7352 euros)