ABN to deliver ScottishPower knockout blow

Iberdrola brings in Dutch bank to assist £12bn bid
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The Independent Online

Iberdrola, the Spanish energy company plotting the £12bn takeover of ScottishPower, has teamed up with ABN Amro, the Dutch bank, to launch a joint bid for the UK group.

ABN Amro is advising the Spanish company, and the Dutch bank's infrastructure fund will also contribute to the planned 800p-per-share offer.

It is understood that Iberdrola is most interested in ScottishPower's UK assets, which include one electricity transmission business, two distribution arms and 6,200MW of power stations (about one tenth of the UK's total).

ScottishPower also owns PPM, a US-based wind farm and gas storage business, which analysts value at between £1.8bn to £3bn. Iberdrola, whose market value of £21.5bn makes it Europe's seventh-largest utility, is expected to sell this division after a takeover.

This weekend at least three other infrastructure funds were trying to bring finance muscle into the ScottishPower takeover. At least one is believed to be of Middle-Eastern origin. The funds could seek to join Iberdrola and ABN Amro's bid, but it is understood that the Spanish-Dutch bid does not need extra finance to execute the deal. The other infrastructure funds could also launch their own rival takeover bids for ScottishPower.

E.ON, the German firm which made an unsuccessful 570p-a-share bid a year ago, is in the midst of a €37bn (£25bn) takeover of rival Spanish firm Endesa. Another mooted trade buyer, Swedish state-owned firm Vattenfall, is not thought to have enough financial firepower to mount a bid.

Scottish & Southern Energy, which has long since harboured ambitions of a takeover of its Scottish rival, is closely monitoring the situation and could bid for any UK assets that are sold off following a successful bid for ScottishPower by Iberdrola. But chief executive Ian Marchant is reluctant to get involved in a bidding war he knows he is unlikely to win.

ScottishPower, headed by chief executive Philip Bowman, and Scottish & Southern Energy held tentative merger talks earlier this year. Following a spike in ScottishPower's share price last week, the company announced that it had received an approach.

Earlier this year ABN Amro's infrastructure fund bought ESP Pipelines from Guy Hands's Terra Firma private equity group for £225m. It was also an unsuccessful bidder for one of National Grid's gas pipe networks two years ago.

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