Ann de Rouffignac
OGJ Online
Seeking to expand its presence in Europe, Dallas-based energy company TXU Corp. increased its stake in Spanish energy company Hidroelectrica del Cantabrico to just under 20%, the company reported Monday.
Simultaneously, Belgium's Electrabel, a unit of Suez Lyonnaise des Eaux, also purchased 10% of Hidroelectrica that was previously held by two Spanish banks, according to published reports.
TXU Europe already held about a 14% stake in the company. The additional stake is valued at about $136.5 million euros. TXU earlier launched a friendly takeover bid for all of Hidroelectrica, but the overture was rejected as insufficient by Hidro�s board. TXU had offered 21.25 euros/share.
Spanish utility Union Fenosa came in with a bid of 24 euros/share, but government officials rejected that bid because a takeover by Union Fenosa would interfere with eventual competition in Spain, according to Carol Peters, spokeswoman for TXU Corp.
Meanwhile, TXU is still interested in eventually acquiring the entire company, but said in a statement that it would not launch another takeover bid. Instead, TXU is in discussions with the board and the Spanish government about what is best for the company and for the region, Peters says.
�We�re all just sitting there looking at each other at the table,� says Peters. �We�re not out of the picture, though. We are still interested in the region and the company.�
Hidrocant�ico is the fourth largest integrated Spanish energy company with assets in Asturias, in northern Spain. The company has about 520,000 electricity customers and over 115,000 natural gas customers with 1999 sales exceeding 7,600 gigawatt-hours of electricity. It has over 2,100 Mw of installed electric generation capacity with generation market share of about 7%.
TXU Europe is pursuing assets or firm contracts with power generators that give its trading and marketing operation in Europe access to firm physical power on the continent. The investment in Hidroelectrica forms a part of TXU�s overall European strategy.
TXU already has a huge stake in the UK with its investment in Eastern Energy, an electrical distribution and generation utility.
But recently, TXU has turned its attention to the European continent and is talking with European players or anybody interested in working a deal around its 7,000 Mw of generation in Britain. Because of regulatory difficulties in England and resulting lower prices for power than anticipated, ownership in generation in that country has not brought the returns expected. TXU is seeking a swap or possibly a sale of a portion of these assets.
�We have talked to Electricite de France (EdF) about the UK generation� including a swap of assets with EdF,� says Peters. �But there is nothing to announce. We have talked with a lot of other people, too.�
Industry observers are carefully watching any activities with EdF because its host country France is one of the slowest countries to open its electricity markets to foreign private investment. There is a close race to see which foreign company gets a stake in that country first.
