ScottishPower has accepted terms of a near £12bn takeover bid from the Spanish group Iberdrola, in a move that will create Europe's third-largest utility.
Iberdrola is offering 777p a share in a mixture of cash and paper, valuing ScottishPower at £11.6bn.
Shareholders will receive 400p a share plus 0.1646 of a new Iberdrola share. ScottishPower will also declare a special dividend of 12p a share, which is included in the 777p takeover terms.ScottishPower chief executive Philip Bowman said the merger with the Spanish company would give ScottishPower the strength to compete in the rapidly consolidating European utilities industry and would also provide better protection for employees.
The group is Britain's fifth largest energy provider, with more than 5 million customers, and is also one of the leading windfarm operators in the UK and the US.
Mr Bowman said: "ScottishPower needs to expand its geographical presence, diversify operating risks, achieve greater economies of scale and have the financial strength to invest in substantially larger infrastructure projects over coming years."
"This transaction achieves these objectives without the adverse social consequences for employees that would be likely in most other merger scenarios.
"The combination of the two businesses will enable ScottishPower to compete on a global scale in an increasingly competitive environment and the terms offered by Iberdrola provide an attractive price for ScottishPower shareholders and allow shareholders the opportunity to maintain an interest in the enlarged Iberdrola Group."
For Iberdrola, which is the second largest utility in Spain, chairman and chief executive Ignacio Galan said the deal is "fully in line with our respective strategies".
He 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. All of this will be positive for all our stakeholders."
Shares in ScottishPower fell 6p to 740p in early trading, reflecting disappointment with the terms of the deal and that it includes a paper element rather than all cash. Some analysts had been hoping for an offer as high as 800p a share.
Iberdrola is offering 777p a share in a mixture of cash and paper, valuing ScottishPower at £11.6bn.
Shareholders will receive 400p a share plus 0.1646 of a new Iberdrola share. ScottishPower will also declare a special dividend of 12p a share, which is included in the 777p takeover terms.ScottishPower chief executive Philip Bowman said the merger with the Spanish company would give ScottishPower the strength to compete in the rapidly consolidating European utilities industry and would also provide better protection for employees.
The group is Britain's fifth largest energy provider, with more than 5 million customers, and is also one of the leading windfarm operators in the UK and the US.
Mr Bowman said: "ScottishPower needs to expand its geographical presence, diversify operating risks, achieve greater economies of scale and have the financial strength to invest in substantially larger infrastructure projects over coming years."
"This transaction achieves these objectives without the adverse social consequences for employees that would be likely in most other merger scenarios.
"The combination of the two businesses will enable ScottishPower to compete on a global scale in an increasingly competitive environment and the terms offered by Iberdrola provide an attractive price for ScottishPower shareholders and allow shareholders the opportunity to maintain an interest in the enlarged Iberdrola Group."
For Iberdrola, which is the second largest utility in Spain, chairman and chief executive Ignacio Galan said the deal is "fully in line with our respective strategies".
He 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. All of this will be positive for all our stakeholders."
Shares in ScottishPower fell 6p to 740p in early trading, reflecting disappointment with the terms of the deal and that it includes a paper element rather than all cash. Some analysts had been hoping for an offer as high as 800p a share.
Source: The Guardian
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