Endesa wins Italian bid

July 24, 2001 Posted: 0639 GMT

LONDON (CNN) -- Endesa, Spain's largest power utility, agreed to buy Italy's Elettrogen for 3.7 billion ($3.2 billion), ending a month-long bidding battle.

Spain's No. 2 electricity company will pay Enel, the former state-owned power utility, 2.6 billion in cash and assume debts of about 1 billion.

Enel, which provides electricity to 29 million customers, needs to sell power generating capacity and transfer the national power grid to an independent operator by 2003 to comply with European Union competition requirements.

The Italian company, still 70 percent owned by the Italian government, plans to sell another two business.

For Endesa, the acquisition makes it the third-largest power generator in Italy and enables the utility to break the shackles imposed on it by a Spanish government that does not allow it to increase its presence in its domestic market. The company controls 45 percent of the Spanish generating market.   

A proposed 14 billion takeover of Spanish rival Iberdrola collapsed in May due to antitrust regulations.

The multi-utility, which has spent more than $10 billion acquiring stakes and a share of the Latin American power market that now account for 43 percent of group operating profit, has turned its attention to European expansion.

Endesa's acquisition is the second in the Italian market in the space of three days. On Sunday, A Fiat-led group, that included France's Electricite de France, agreed to buy Italian energy conglomerate Montedison for $4.9 billion.

Like Fiat and EdF, Endesa wants a piece of the fast-growing electricity sector in Europe's fourth-biggest economy.

Italian energy group Edison, which is 61 percent owned by Montedison, dropped out of the bidding, handing Elettrogen to the Spaniards. Edison pulled out of auction because the price had gone too high, Reuters said, citing sources.

Endesa was joined in its bid for Elettrogen by Spain's biggest bank, Banca

Santander Central Hispano, and Italian regional utility ASM Brescia. The race for Elettrogen began in June with five bidders on the starting line.

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