SPAIN: Spain's Iberdrola agrees to buy Scottish Power for 6 billion gbp to create Europe's third-biggest utility and a world leader in renewable energy

Spain's Iberdrola is to buy Scottish Power for an agreed 6 billion pounds (22.5 billion US dollars), they announced on Tuesday (November 28), to create Europe's third-biggest utility and a world leader in renewable energy. Iberdrola, Spain's second-largest utility, said it would pay 400 pence in cash and 0.1646 new shares for each Scottish Power share, worth a total of 777p a share at Monday's close. The price includes Scottish Power's 12p special dividend. The value of the long-awaited bid is below the expected 800p a share, and at 1250 GMT Scottish Power shares were down 0.8 percent at 740p. Iberdrola was down 2.4 percent at 32 euros. The DJ Stoxx European utilities sector index was down 0.4 percent. "The integration between Iberdrola and Scotish Power is fully adjusted to the principles of our recently approved strategic plan and to the compromises made with our shareholders, our costumers, our employees and the society in general," Ibedrola's Chairman Igancio Sanchez Galan told a news conference in Madrid. Some analysts said the deal could leave room for a rival bid, as Scottish Power investors might be persuaded by a lower offer if it was all cash. Germany's RWE and Sweden's Vattenfall have been tipped as possible rival suitors. But other analysts think Iberdrola was paying a price broadly in line with recent sector deals and saw little prospect of a counter-offer. Europe's utilities are consolidating as governments ease takeover rules and firms are bolstered by high energy prices and cost cuts. Scottish Power, Britain's fifth-largest energy supplier, has long been viewed as a target for larger rivals. Last year it rejected a 570-pence-a-share offer from E.ON. After buying Scottish Power, Iberdrola will trail only France's EDF and E.ON among Europe's biggest utilities.

ITN Source | November 29, 2006

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