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Iberdrola to buy Scottish Power for 11.6 billion pounds
AFP
LONDON
Petroleumworld.com 11 28 06British group Scottish Power Tuesday accepted a takeover bid worth 11.6 billion pounds (17.15 billion euros, 22.55 billion dollars) by Spain's second-biggest power company Iberdrola, a move which is set to create Europe's third biggest utility group.
The takeover will increase the trend towards consolidation in the European energy sector, while Spain is finally set to create a so-called utility champion.
"The offer values each Scottish Power share at 777 pence and the entire issued ordinary share capital of Scottish Power at approximately 11.6 billion pounds," a statement to the London Stock Exchange said. The bid is in cash and shares.
Some analysts had expected a bid worth as much as 12.0 billion pounds, or about 800 pence per share.
In early morning deals, Scottish Power fell 1.41 percent to 735.50 pence on London's FTSE 100. The British capital's leading share index dropped 0.30 percent to 6,032.20 points.
Iberdrola chairman and chief executive Ignacio Galan said the proposed integration of Scottish Power was fully in line with the groups' strategies.
"It will create Europe's third largest utility; it will create value for both our companies; and it will be very positive for employees and consumers, who will benefit from the competitive advantages of the new group."
Iberdrola is forecasting annual savings of 88 million pounds from the acquisition and said it expects the deal to boost earnings immediately upon completion.
"We will be able to achieve near term synergies and access economies of scale in the medium and long term through common systems and processes," Galan added.
"The new group will be well positioned for the future European energy market and will enjoy a strong growth platform in Spain, the United Kingdom, Continental Europe, North America and the global market, particularly in renewable energy, a sector in which it will be a world leader."
Iberdrola said it had secured the unanimous backing of the Scottish Power board.
Scottish Power shareholders will receive 400 pence in cash and 0.1646 of a new Iberdrola share, for every Scottish Power share they own.
The Spanish group said its bid overall is 53 percent cash and the new shares to be issued will constitute 2.4 percent of the enlarged company's share base.
Scottish Power chief executive Philip Bowman said the deal would enable his company to expand its geographical and operational presence and diversify its portfolio.
"This transaction achieves these objectives without the adverse social consequences for employees that would be likely in most other merger scenarios," Bowman said.
Iberdrola had announced on November 10 that it was in negotiations with Scottish Power, the fifth biggest gas provider in Britain with nine percent of the market, and the sixth biggest electricity provider with 13 percent.
Scottish Power is present also in Canada and the United States.
The move to buy the British company comes as the French groups Suez and GDF are in the process of finalising their own merger, which analysts say was designed in large part to thwart a bid by the Italian Enel for Suez.
AFP 28 0938 GMT 11 06
Copyright© 2001 AFP. All Rights Reserved.
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