Wednesday, February 6, 2008

Chasing Iberdrola

Regular readers know that we have an abiding interest in the European utilities.
Here's a short piece from Lex at the Financial Times:

Has the impending takeover of Endesa by Italy’s Enel and Spain’s Acciona created a bridgehead for other companies keen to buy Spanish utilities? The latest two companies keen to find out are France’s EDF and domestic construction group ACS, who are interested in buying Iberdrola. The government grudgingly agreed to Enel and Acciona buying Endesa as less bad than a takeover by Germany’s Eon. Even so, its imposition of onerous conditions on the deal is being challenged by European regulators. Even sweetened with a Spanish partner, the government will not view favourably a takeover of its largest utility by state-controlled EDF.

There is not doubt that ACS would love a deal. It already owns an 8 per cent direct stake in Iberdrola, could pick up its renewables business and some hydro plants, then merge them with UniĆ³n Fenosa, of which it owns 45 per cent. But politics is not the only obstacle. ACS and Iberdrola are fierce rivals domestically, reportedly fuelled by animosity between senior managers. For ACS to take on Iberdrola, four times its equity value, is simply a pipe dream....MORE