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Veba-Viag talks confirmed
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August 31, 1999: 8:45 a.m. ET
But Bavarian finance ministry says a merger deal still isn't definite
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LONDON (CNNfn) - More hints emerged Tuesday of a huge merger between Viag and Veba, two of Germany's three largest utilities.
The state of Bavaria's finance ministry confirmed the companies have been in talks, although it said a deal isn't definite. The southern German state owns a 25 percent interest in Viag.
Finance Minister Kurt Faltlhauser told Reuters, "much in the Viag-Veba merger would make sense," although he also confirmed that talks with other, unidentified groups are under way.
Viag and Veba have confirmed they have been in talks regarding the reorganization of Germany's liberalizing utility industry, but both consistently have played down persistent reports of a merger.
A combined company would be worth more than $40 billion and have annual revenue of 64 billion euros ($67 billion).
Faltlhauser said a decision on any merger is expected in the autumn, and he indicated the sticking point of where to locate headquarters of the enlarged company could be overcome. Faltlhauser said the company could be based outside Bavaria in Düsseldorf, at Veba's headquarters.
Reports of a deal linking Viag's Bayernwerk subsidiary and Veba's Preussenelektra unit first surfaced after the plan was run past the German cartel office, to see if it stood a chance of gaining regulatory approval.
Preussenelektra is Germany's number two electricity supplier, with 13 percent of the market. Viag is ranked third, with 8 percent. The market leader in Germany is RWE.
Veba and Viag shares have been on a rising trend as hopes of a deal have spread.
In Frankfurt Tuesday Veba (FVEB) rose 1 percent to 60.10 euros, while Viag (FVIA) shares eased to 19.70 in a broader market that was down 2 percent.
Neither company would comment on the latest report.
-- from staff and wire reports
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Viag
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