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General Electric buys Iberdrola's French renewables unit

by Renee Cordes  |  Published January 2, 2013 at 2:20 PM
Spanish utility Iberdrola SA on Monday, Dec. 31, unveiled an agreement to sell its French renewables unit to investors including General Electric Co. in a deal valued up to €400 million ($528 million).

The valuation breaks down into an initial €350 million price tag, including loans and debt, and a possible additional payment of €50 million, Iberdrola said in a filing to the Spanish stock market regulator, without spelling out the conditions.

Under the terms of the deal, General Electric, through its Netherlands-based Guayama PR Holdings BV, and Germany's Munich Ergo Asset Management GmbH, or MEAG -- a fund manager for insurers Munich Re Group AG and Ergo Versicherungsgruppe AG -- will each buy stakes of 40% in Iberdrola Renovables France SAS.

The remaining 20% will go to EDF Energies Nouvelles3, part of Electricité de France SA.

Through the acquisition, the new owners will gain 32 land-based wind farms with a total capacity of 321.4 megawatts, which analyst Victor Peiro Pérez of Bankia Bolsa in Madrid said points to a valuation of €1.1 million to €1.2 million per installed megawatt, "in line with the recent operations in the sector."

Monday's announcement comes three weeks after Iberdrola announced the sale of seven onshore wind farms in Germany -- with total capacity of 62.9 megawatts -- to Mannheim-based MVV Energie AG in a deal valued at €52.7 million.

The divestments are part of plan by Bilbao-based Iberdrola to sell €2 billion worth of assets by 2014 to reduce debt, which stood at €31.8 billion at the end of the third quarter. The company also plans to invest €12.3 billion in the next three years, 37% less than in 2010-2012, mainly in electricity transmission networks and renewables.

As Iberdrola heads into the new year, it faces a headache in South America, where Bolivian President Evo Morales expropriated four affiliates this past weekend while opening the door to talks with company executives next week.

The Socialist leader has sought to put the telecommunications, water and energy sectors in the South American country under state control since taking power in 2006.

Bolivian army and police seized buildings occupied by Iberdrola on Saturday, hours after Morales ordered the nationalization of four company affiliates: electricity suppliers Electro paz and Elfeo; services company Edeser; and investment management affiliate, Compañia Administradora de Empresas.

Speaking on a state-owned broadcaster's program on Sunday, Morales indicated that the government would hold talks with Iberdrola next week. "We're going to talk, always in a cordial atmosphere, to see in what way we can arrive at a transition that is favorable for both sides."

The move comes more than seven months after Bolivia seized assets of Spain's Red Eléctrica Corp. SA, the operator of Spain's electricity grid, weeks after Argentine President Cristina Fernández de Kirchner wrested control of YPF SA, that nation's biggest oil and gas producer and a unit of Spain's Repsol YPF SA.

While Iberdrola has declined public comment on the Bolivian situation so far, Spain's Ministry of Foreign Affairs released a statement Saturday saying: "This decision by the Bolivian government involves companies that carried out the public service of distributing electricity that have never belonged to the Bolivian state."

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Tags: Compañia Administradora de Empresas | Cristina Fernández de Kirchner | Edeser | EDF Energies Nouvelles3 | Electricité de France SA | Electro paz | Elfeo | Evo Morales | General Electric Co. | Guayama PR Holdings BV | Iberdrola Renovables France SAS | Iberdrola SA | MEAG | Ministry of Foreign Affairs | Munich Ergo Asset Management GmbH | MVV Energie AG | Red Eléctrica Corp. SA | YPF SA

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Renee Cordes

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