Germany's RWE may enter bid battle for ScottishPower

RWE, the German owner of npower, refused to rule itself out of a bid for ScottishPower yesterday, saying it was keen to grow its UK energy business. Harry Roels, RWE's chief executive, said he was interested in buying both power generation assets and retail energy customers - but he said that RWE would not do an acquisition "at all costs".

His comments came as ScottishPower shares fell, despite indications that Spain's number two energy company, Iberdrola, had approached it with a £12bn takeover offer worth 800p a share. Iberdrola confirmed yesterday that it had not yet taken a decision.

Analysts are sceptical that ScottishPower could attract a bid at 800p, a price that would represent a 40 per cent premium on the 570p E.ON of Germany offered only a year ago. Since then, ScottishPower has sold off its US division PacifiCorp to Warren Buffett for $9bn (£4.7bn). Brokers said that there was already a takeover premium of at least 10 per cent built in. Shares fell 3.5p to close at 726.5p last night.

Iberdrola is being advised by ABN Amro, but it is not thought to have financing in place yet, nor is it clear whether it has a private equity partner on board.

Reports yesterday that it would split up ScottishPower, selling its US wind power business, were downplayed. It was pointed out that Iberdrola, already one of Europe's biggest wind energy companies, had recently agreed a €3bn (£2bn) deal with the Portuguese turbine manufacturer Gamesa.

Iberdrola's approach to ScottishPower is understood to have been made without the knowledge of one of its key shareholders, the Spanish construction company ACS, which owns 10 per cent. ACS has said it may raise its stake in Iberdrola to 24.9 per cent amid speculation that it may attempt to merge the company with rival energy supplier Union Fenosa, in which it has a 35 per cent shareholding.