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Spanish power deal looms
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September 27, 2000: 7:24 a.m. ET
Endesa and Iberdrola discuss merger to create $31B power utility
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LONDON (CNNfn) - Spanish power firms Endesa SA and Iberdrola SA said Wednesday they were in talks aimed at creating an electricity firm worth more than 35 billion euros ($31 billion).
Reports of talks between Spain's two largest power firms emerged in recent days, although the companies last week said only that they were talking to a variety of players in the consolidating European electricity market.
Any combination of the two electricity generators would face tough regulatory scrutiny, because the companies together account for some 80 percent of Spain's power supply.
In a mandatory filing to the Spanish stock market authority, Endesa said the plan included "divestments aimed at meeting requirements of competition authorities."
"Endesa cannot guarantee that as a result of the talks there will be any business decision," the statement concluded. An Endesa spokeswoman refused to add to the official statement, other than to say the firms were discussing a "friendly" merger. She declined to say when the company might release a further statement.
Endesa has a market value of around  22.5 billion, while Iberdrola is valued at 12.6 billion. Endesa stock rose 1.6 percent to 21.37 after the news Wednesday, while Iberdrola shares gained almost 1 percent to 13.97.
Analysts said a deal could be good for Endesa, Iberdrola and for the Spanish government, although politicians have expressed concern about the implications for competition.
"It seems that they already have an advanced project," said Nicolas Fernandez, an analyst at broker Ibersecurities. "It would definitely be good for the government to have a strong Spanish group able to compete on an international level."
To make the deal acceptable to Spain's competition authorities, the two companies were prepared to sell generation and distribution capacity equal in size to one of the two existing firms, Spanish newspaper ABC said Wednesday. 
-- from staff and wire reports
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Endesa
Iberdrola
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