E.ON fails to bag Endesa but secures Spanish and Italian assets

After a 14-month battle to acquire Spanish power company Endesa, E.ON has accepted an alternative deal, which will see the German multi-utility increase its position in both the Spanish and Italian electricity markets.

As part of a deal that will result in Enel and Spanish conglomerate Acciona acquiring Endesa for $57.5bn, E.ON will be offered the chance to buy some of Endesa’s power generation portfolio.

Under the terms of the agreement, E.ON will not launch a new bid for Endesa for at least four years. In exchange, Enel and Acciona plan to sell E.ON a “significant portfolio” of assets in France, Italy, Spain, Poland and Turkey, worth about $13.4bn. E.ON said that it would become the fourth largest owner of power generation capacity in both Spain and Italy.

E.ON had faced opposition in Spain to its bid for Endesa and the agreement that has now been reached is unlikely to stop planned action by the European competition authorities against Spain for its protectionist position.

ERG plans generation boost

Italy’s largest independent energy and petroleum group ERG has announced plans for an investment programme that will see it significantly expand power generation.

Some 65 per cent of the planned €2.5bn ($3.4bn) investment programme covering 2007 to 2010 will be used for electricity and gas production including the development of a wind energy portfolio.

ERG said it wants to raise its share of the Italian wind power sector from five per cent in 2005 to 20 per cent in 2010 its share in the electricity generation market overall will increase from the present two per cent to four per cent in 2010.

API Nova Energia, a subsidiary of a fellow Italian oil company API Holding, last month formed a joint venture with Iberdrola to develop 350 MW of wind power in Italy over the next two years. Seven projects are to be built in Sicily and Puglia at a cost of €500m.

British Energy challenges Credit Suisse

UK nuclear power producer British Energy is lined up to face Credit Suisse in court in May over the control of a coal fired power plant.

The dispute stems from the near collapse and subsequent government bailout of British Energy in 2002, when bondholders were given options to buy Eggborough, a 2000 MW coal fired plant in Yorkshire, in the year 2010.

British Energy is objecting to an attempt by Credit Suisse to consolidate these rights into a company called Ampere, which British Energy claim is illegal. The coal plant was not regarded as a core asset at the time but since then, gas prices have risen sharply and British Energy has suffered a string of outages in its nuclear fleet, increasing the attraction of the Eggborough plant.

Spanish giants plan joint auctions

Spanish utilities Endesa and Iberdrola plan to hold five joint electricity auctions, with a total volume of 14.9m MWh. Commencing in June 2007.

The auctions will be held every three months until June 2008 and will fulfil there obligation to offer virtual power plant capacity via competitive and transparent auctions.

The requirement to sell power was established under a royal decree that set the electricity tariff for 2007 and obliged Endesa and Iberdrola to offer capacity to all agents within the Spanish electricity sector, in order to increase the amount of power acquired via bilateral contracts and stimulate market liquidity.

EDP buys US wind company

The Portuguese utility Energia de Portugal (EDP) has purchased Houston-based Horizon Wind Energy from Goldman Sachs in a deal costing $3bn. Horizon has 559 MW of wind power in operation with a further 997 MW under construction.

EDP paid $2.2bn for the portfolio and has assumed $180m in debt. EDP plans to invest an additional $600m in existing wind power projects as part of the deal. EDP has said previously that it plans to triple its wind energy capacity by 2010 by investing in Europe and the USA. “We believe the US wind energy market has a significant growth potential,” commented EDP’s chief executive Antonio Mexia.

Suzlon raises REpower bid

India’s Suzlon Energy has stepped up is fight for control of REpower by raising its offer to €150 ($204) per share.

The bid for the German wind energy business is €10 above the competing offer from France’s Areva and Suzlon, along with its bidding partner Martifer, expect to gain a 70 per cent interest as a result.

Areva currently holds 30 per cent of REpower whose shareholders have until 4 May to decide on the rival bids. The revised bid values the wind turbine manufacturer at €1.22bn.

News Digest

Alinta chooses suitor: Singapore Power and Babcock Brown look set to buy Alinta for A$7.4bn ($6.2bn) after the Australian energy utility’s board chose their offer ahead of a rival bid from Macquarie Bank and have increased their voting share holding.

Babcock secures solutions: Babcock International Group’s £0.63 ($1.26) per share cash offer for the remaining shares in International Nuclear Solutions (INS) that it does not already own has been accepted by the INS board.

Dynegy completes: Dynegy Inc. has completed the combining of operating assets and establishment of a new joint venture with LS Power giving it a generation portfolio totalling around 8000 MW.

EDP on track: Energias de Portugal (EDP) has signed an MOU with Algerian gas company Sonatrach that may lead to business partnerships in gas and power generation, with Sonatrach acquiring EDP stock in exchange for a gas supply deal.

Fluor react: Fluor Corp. plans to combine resources from both its government and power groups to form a business dedicated to addressing the needs of the market for the next generation of nuclear power plants.

Garlock seals deal: Garlock Klozure, a division of Garlock Sealing Technologies, has acquired the Syntron RP Mechanical Seal line from FMC Technologies and will relocate to Garlock Klozure’s new facility in Palmyra, New York.

Greek collection: Endesa and Greek metallurgical and engineering company Mytilineos Holdings are to form a joint venture to develop independent thermal and renewable power projects in southeastern Europe.

New fit for Dresser: Dresser-Rand has acquired the steam turbine valve supply business Gimpel from Tyco Flow Control for undisclosed terms.

Renewable outcome: Acciona plans to combine its renewable assets with those of Endesa to form a worldwide leader in renewable energies, following the completion of the Enel, Acciona takeover of Endesa.

Russian costs rise: Russian power utility RAO UES has reported revenues up 19 per cent to RUB654bn ($25.5bn) in the first nine months of 2006 but higher fuel cost meant cost were also sharply up by some 17 per cent.

RWE online approval: Germany’s Federal Cartel Office has approved RWE’s purchase of online power distributor Eprimo but blocked a plan by RWE to takeover regional gas company Saar Ferngas.