Iberdrola finalises ScottishPower bid

Published on Sunday 26 November 2006 00:15

THE chairman of Iberdrola, the Spanish utility group, has secured the backing of his biggest shareholder, the wind farm builder ACS, for a £12bn bid for ScottishPower which is close to being announced.

Ignacio Sanchez Galan is understood to have held informal talks with ACS on Wednesday at which ACS pledged to support his 800p-per-share bid for ScottishPower. ACS is the only major shareholder without representation on Iberdrola's board, which supports Galan's planned cash and shares offer.

ACS, chaired by former Real Madrid chairman Florentino Perez, is thought to be keen to forge links with ScottishPower as the Glasgow-based company is a market leader in wind farms in the UK and US. ACS invested 150m in building wind farms and solar power stations in the first six months of this year, and combining Iberdrola and ScottishPower would create a substantial customer.

ScottishPower, run by chief executive Philip Bowman, revealed two weeks ago that it was in talks with Iberdrola and insiders expected a deal worth 12bn, 40% higher than a previous offer from E.ON of Germany, to be announced around the middle of last week.

Talks have been extended as negotiators discuss the finer points, such as the precise split between shares and cash that Iberdrola will offer. Industry sources believe the Scottish utility group is holding out for 60% cash. But the deal offers such a premium to ScottishPower shareholders that a 50/50 split is unlikely to be rejected.

Opposition was more likely to come from Iberdrola's shareholders, but ACS and the other main ones, BBK and BBVA, are understood to support the idea of creating a Spanish champion in the European energy sector.