European Utility Mergers

The Economist:

Energy-industry insiders predicted a series of mergers and acquisitions in European utilities at the beginning of this year. But hardly anyone expected the announcement in February of two of the biggest-ever takeovers in corporate Europe: the bid for Endesa, a Spanish electricity company, by E.ON, a German power giant; and the merger of Gaz de France (GDF), a French gas firm, and Suez, another French utility.

The latest takeover in the industry, announced this week, is smaller, less spectacular and not much of a surprise. Iberdrola, a Spanish electricity company, announced on November 28th its €17.2 billion ($22.5 billion) bid for Scottish Power, a British utility. Compared with the E.ON bid, now valued at €37 billion, and the €78 billion merger of Suez and GDF, the deal looks like small beer. Yet the acquisition will create one of Europe's six biggest utilities and a world leader in renewable energy. And in striking contrast to the two bigger deals, which are bogged down in legal and political quagmires, it is likely to proceed smoothly.