Electricité de France (EDF), the giant French utility, is drawing up plans to merge its British energy subsidiary with Scottish Power if it secures one of Europe's biggest-ever takeover deals.
Scottish Power is owned by Iberdrola, Spain's largest energy supplier by market value, and EDF is hoping to acquire it as part of a €63bn consolidation of the European utility sector.
EDF is in talks about an alliance with Spanish construction group Actividades de Construcción y Servicios (ACS), which would see the duo make simultaneous bids for Iberdrola and Spain's third largest supplier Union Fenosa. Under the deal, ACS would acquire all of Iberdrola, which has a market value of €50bn, and break it up. Scottish Power, worth about €15bn, and other units would be sold to EDF. ACS already holds a 13 per cent stake in Iberdrola.
EDF, meanwhile, would oversee the bid for Unión Fenosa, a company valued at €13bn in which ACS holds a 45 per cent stake.
Iberdrola recently expanded the responsibilities of Scottish Power chief executive and group strategy head José Luis del Valle, and it is unclear whether he retains his leadership of the British company under the new arrangements.
French president Nicolas Sarkozy said last week he was in close contact with the Spanish government to discuss energy issues and that the two nations were trying to find "consensual solutions". The Spanish firms declined to comment.
An EDF spokesperson was reported as saying the French firm was willing to play a role in restructuring Spain's energy sector, but would only do so with the approval of the Spanish authorities. The deal would be Europe's largest cross-border acquisition in the energy sector. EDF, which is owned by the French state, is one of Britain's largest energy suppliers with 5.1m customers.
It is not clear whether EDF would face competition hurdles in Britain if it pursued a takeover of Scottish Power. Scotland's first minister, Alex Salmond, is campaigning against a French takeover of Scottish Power, which was bought by Iberdrola for €15bn in 2006.
The EU has worked to heighten competition and create a single cross-border energy market in an industry still dominated by former or state-owned monopolies. It has allowed a French power producer to set up in Spain and an Austrian company to move into Italy.
Source: The Telegraph |By Mark Kleinman and Juliette Garside