Europe has a new energy giant with the purchase of Scottish power by Spain’s Iberdrola. The 17 billion-euro cash and shares offer creates Europe’s third biggest utility, and a world leader in renewable energy. The price represents a dividend on Scottish power’s current share price, but Iberdrola boss Ignatio Sanchez Galan says it is a good deal. “It’s true we’re paying some 15 to 20 percent over the odds for Scottish power, but we’re paying in shares that themselves have gained 50 percent in the past year. Our takeover of E.ON failed because we were too stingy”.
In terms of the Spanish energy market the deal is even more significant, as Iberdrola now edges ahead of Endesa in terms of turnover, and is beefed up for any renewed takeover struggle with E.ON for the former state monopoly. Less than 20 percent of the new company’s megawatts are generated cleanly, but new renewable supplies of nearly two-thirds total existing capacity are in the pipeline, quadrupling Iberdrola’s green credentials.
Investments in wind turbine maker Gamesa could now pay off with their installation in wind-rich Scottish sites. Analysts say the fit is good between the two companies, and costs and capital expendidure can be cut by over 170 million euros a year. If all goes to plan in the medium term less than half of Iberdrola/Scottish Power’s projected output of 64 000 megawatts will be from dirty traditional methods of generation.